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OBJECTIVES #1 / #2
• SWBAT COMPARE AND CONTRAST DIFFERENT
ECONOMIC SYSTEMS (TRADITIONAL, MARKET,
COMMAND AND MIXED) AND IDENTIFY THE
POLITICAL SYSTEMS THEY ARE ASSOCIATED
WITH.
• SWBAT IDENTIFY HOW NATIONS UNDER EACH
SYSTEM ALLOCATE THEIR LIMITED
RESOURCES.
ECONOMICS
FINANCIAL LITERACY
ECONOMICS DEALS WITH THE
PRODUCTION, DISTRIBUTION AND
CONSUMPTION OF GOODS AND SERVICES.
FINANCIAL LITERACY  USE KNOWLEDGE
AND SKILLS TO MANAGE LIMITED
FINANCIAL RESOURCES EFFECTIVELY FOR
A LIFETIME OF FINANCIAL SECURITY.
Economic System
• Refers to how people and nations use limited
resources to satisfy their wants and needs.
• Questions that people as well as nations must
answer…
– What goods and services should we produce?
– How should we produce them?
– For whom should we produce them?
– The Economic system will answer these questions.
4 Main types of Economies
Traditional
Command
Mixed
Market
C&C
• IN YOUR OWN WORDS BREIFLY DESCRIBE
EACH OF THE 4 ECONOMIC SYSTEMS (USE THE
HANDOUT). THEN COMPARE, CONTRAST AND
SUMMARIZE THE INFORMATION IN A CLOSING
PARAGRAPH TO BETTER UNDERSTAND THE
TYPES OF ECONOMIES.
• You may work with a partner
TRADITIONAL ECONOMY
• People produce what they need to survive.
• An economy that depends heavily on hunting,
gathering, and farming.
• Where would you expect to see this in the
world today?
• Normally found in underdeveloped nations.
MARKET ECONOMY
• A SYSTEM WHERE DECISIONS REGARDING THE
ALLOCATION OF RESOURCES DEPENDS ON
FORCES SUCH AS SUPPLY AND DEMAND.
• A ‘TRUE’ MARKET ECONOMY IS FREE OF
GOVERNMENT INFLUENCE.
• Laissez-faire
• Competition is the key – Keeps quality up,
prices down
COMMAND ECONOMY
• AN ECONOMY WHERE SUPPLY AND DEMAND
IS REGULATED BY THE GOVERNMENT RATHER
THAN MARKET FORCES.
• GOVERNMENT PLANNERS DECIDE WHAT
GOODS AND SERVICES ARE PRODUCED AND
HOW THEY ARE DISTRIBUTED.
• The government owns the factories, land, and
stores
MIXED ECONOMY
• AN ECONOMIC SYSTEM IN WHICH PRIVATE
BUSINESSES AND THE GOVERNMENT COEXIST.
• MOST MODERN ECONOMIES ARE MIXED.
WITH SIGNIFICANT SEGMENTS OF THE
ECONOMY BEING PRIVATE AND STATE RUN.
COMPARISONS
traditional market
command
mixed
How things By the
are decided people
By the
people and
market
factors
By the
government
By the people
and
government
Importance Very
of citizens
important
Very
important
Little
importance
Somewhat
important
Importance No
of
importance
government
No
importance
Very
important
Somewhat
important
Economic/Political Systems
I. Communism & Dictatorships (Command
Economy)
A. Examples: Cuba, China (prior to 1989),
Vietnam, North Korea, Venezuela, Laos
1. Government owns almost all means of
production and almost all stores, from
factories and land to consumer products.
2. Government decides what and how much to
produce.
Communism
3. People work for the good of the nation.
Because of Nationalism
4. Government decides how people are
rewarded for their work.
5. Supply is limited. Luxuries are available to
only a chosen few.
6. Ultimate goal is to eliminate social class.
7. Individualism is frowned upon (no elitism)
8. No Private Property under communist
government.
9. Military service is typically required.
Economic/Political Systems
I. Socialism (mix of government ownership and
private enterprise) – Mixed Economy
A. Canada, Japan, All of Western Europe (France,
Germany, Spain, Britain, etc.). China = Socialist
Dictatorship
1. Government owns major means of production and
decides what and how much to produce. Individuals
are allowed to own and invest privately, though
private investments are closely regulated.
Socialism
2. People work for the good of the nation.
3. Government owns some major industries,
majority are privately owned
4. Progressive tax system, the more you make
the more pay. Goal = more social equality,
less “have-nots”.
5. Majority of property is privately owned.
Economic/Political Systems
I. Capitalism (Free Market Economy)
(roots are in laissez faire economics)
A. Examples: USA, Mexico, Australia
1. Almost all means of production are owned by
individuals, not by the government.
Consumer spending decides what and how
much is produced. Supply and demand
decides cost.
Capitalism
2. Buyers and sellers compete for their own
advantage. Free competition can mean
greater efficiency and lower prices. Freedom
to make profit however also means investors
can lose money.
3. People can work anywhere. Wages
determine how much they can buy.
Government provides some services to help
the poor.
Capitalism
Freedoms in our American Economy
1.Freedom to earn profits
2.Freedom to own property
3.Free competition among business firms
4.Free competition among workers
5.Free market
INSTRUCTIONAL GOAL #3 - 12/10
- WILL BE ABLE TO DEVELOP A PLAN
FOR SHORT-TERM INVESTMANT
STRATEGY.
STOCK MARKET
• SHARE OF STOCK  A SHARE OF OWNERSHIP OF
A COMPANY, SHARE THE RISKS, REWARDS AND
DESCISIONS.
• HOW TO MAKE MONEY  DIVIDENDS AND SALE
OF STOCKS.
• POSSIBLE INFLUENCES ON THE VALUE 
WEATHER, COMPETITORS, FINANCIAL REPORTS,
INVENTIONS, LABOR
SPRINGSTEEN’S ICE CREAM STAND
FREEHOLD, NJ
•
•
•
•
•
•
•
$100, 000 NEEDED
5 SHAREHOLDERS at $20,000 each
STORM DESTROYS ROOF
HOTTEST SUMMER IN RECORD
DQ ANNOUNCES PLANS FOR NEARBY STORE
A STOCKHOLDER LOSES HIS/HER JOB
STORM DESTROYS 1/3 OF DAIRY COWS IN
AMERICA
• RATS FOUND IN BOTTOM OF DQ’S FREEZERS
REVIEW
• WHAT VARIABLES HELPED DRIVE THE STOCK’S
VALUE UP?
• WHAT VARIABLES HELPED DRIVE THE STOCK’S
VALUES DOWN?
• WHAT ELSE, CAN YOU IMAGINE MIGHT HELP OR
HURT THE VALUE OF SPRINGSTEEN’S STOCK?
• WITH OUR UPCOMING STOCK MARKET
SIMULATION DEC. 10-JAN. 17TH, WHAT
VARIABLES MIGHT HAVE THE GREATEST IMAPCT?
How to read a stock quote
Stock Market Simulation
• Reading a stock market quote table worksheet
• Log In handout – Review web site
• Begin investing
PARTICIPATION
• DOES EVERY COMPANY HAVE STOCK?
• EXPLAIN WHAT MIGHT POSITIVELY IMPACT
THE PRICE OF STOCKS IN GENERAL MOTORS.
• EXPLAIN WHAT MIGHT NEGATIVELY IMPACT
THE PRICE OF STOCKS IN THE APPLE
COMPUTER COMPANY.
MAD MONEY
• JIM CRAMER
• SELLING PRICE GOOGLE 17.21
• SIMULATION CHARTS (3 MONTH  5 YEARS)
• PARTICIPATION POINTS
• RECORD NOTES ( INCLUDING THE NAMES OF
STOCKS ) AND ADVICE ON BUYING OR SELLING
THE BULL AND THE BEAR
• BULL MARKET – A stock market that is on the
rise. The trend for the value of stocks is
showing a steady increase.
• BEAR MARKET – A stock market that is on the
fall/decline. The trend for the value of stocks
is showing a steady decrease.
• Named after the way in which each animal
(bull and bear) attacks.
• “Net Change” on a stock market quote table, a
great way to determine bullish or bearish
markets.
HOWTHEMARKETWORKS.COM
• CHECK STANDINGS
• DISCUSS PROGRESS
• QUESTIONS
INSTRUCTIONAL GOAL #4
•DESCRIBE THE VALUE OF
MONEY AND IMPACT
OF INFLATION AND
DEFLATION.
MONEY
• WHAT IS THE VALUE OF MONEY
• COMPLETELY BASED ON TRUST AND
CONFIDENCE
• EXCHANGE RATE REFLECTS CONFIDENCE
• http://www.x-rates.com/d/USD/table.html
A WORLDWIDE VIEW
• The dollar's worth is NOT tied to the worth
of gold held in our treasuries anymore.
What it is tied to is the global economy. If
lots of countries buy our debt and feel that
is a safe purchase (meaning we will pay off
the debt at the prescribed time) the
dollar's value will be high.
3 USES OF MONEY
• MEDIUM OF EXCHANGE(BARTER)
• COMPARE VALUE
• STORE OF VALUE
INFLATION
• INFLATION  THE GENERAL RISE OF THE COST
OF GOODS AND SERVICES
• A GALLON OF GAS 1974  $.39
• A GALLON OF GAS 2010  $2.99
• THE PRICE IS INFLATED ALMOST 800%
INFLATION
•
•
•
•
Related to the flow of currency in a nation.
More currency in circulation = prices rise
However, value of currency is less
THE HIGHER THE RATE OF INFLATION THE
LESS BUYING POWER YOU HAVE.
• Your money buys fewer goods and services
because of each unit’s lack of value.
• In economic times of recession should the
government support inflation?
PARTICIPATION
• WHAT TYPE OF PRODUCTS MIGHT BE
AFFECTED BY THE INFLATION OF GAS PRICES
• HOW MIGHT THE INFLATION OF GAS PRICES
IMPACT THE COST OF PRODUCING OTHER
PRODUCTS?
• HOW MIGHT THE INFLATION OF GAS PRICES
IMPACT THE PRICE OF OTHER PRODUCTS?
DEFLATION
• DEFLATION – A general decline in the prices of
goods and services.
• Related to the flow of currency in a nation
• Less currency in circulation = prices fall
• However, value of money increases
DEFLATION
• How might deflation affect spending in our
nation?
• You have more purchasing power, because
your units of money can buy you more with
the same amount of money.
• How might deflation affect business?
CAPITALISM
• What are the main characteristics of a Free
Market economy?
• What market factors “drive” this type of
system?
• What type of political system do we typically
associate with capitalism and free market
economy?
• Name one country (besides the US) that has
this type of system.
• What weaknesses do you see in this system?
INSTRUCTIONAL GOAL #5
• SWBAT TO DESCRIBE THE IMPACT OF
COMPETITION ON COSTS, PRICES,
PRODUCTION AND CONSUMPTION.
INSTRUCTIONAL GOAL #6
• WILL BE ABLE TO SHOW THE
RELATIONSHIP BETWEEN TRADE
AGREEMENTS AND THE POSSIBLE
IMPACT ON THE U.S. ECONOMY.
Billionaires Up, America Down
• Read short article and answer the questions
that correspond.
• Capitalism; A Love Story. By Michael Moore
COMPETITION
THE STRUGGLE AMONG PRODUCERS FOR THE MONEY OF CONSUMERS.
• COSTS
• PRICES
• GOODS & SERVICES
• PRODUCTION POWER
• COMPETITION AMONG CAR COMPANIES
DROVE GM TO CLOSE PLANTS AND LAY
PEOPLE OFF IN FLINT, MICH. (birthplace of
GM)
TRADE AGREEMENTS
• Ronald Reagan Administration 1980s.
• NAFTA(1994)NORTH AMERICAN FREE TRADE
AGREEMENT, ELIMINATED TARIFFS AND OTHER
TRADE BARRIERS BETWEEN; U.S., CANADA AND
MEXICO.
• EXPORTS INCREASED
• JOBS LOST SEEMED OFFSET BY JOBS GAINED
• AUTO INDUSTRY HURT WHILE OTHER AREAS OF
THE ECONOMY WERE HELPED.
• OUTSOURCING BECOMES A NATION PROBLEM.
Warm Up 12/19
1. Why is competition such an important factor
in a Free Market Economy?
2. How has increased global competition been
bad for the American worker?
3. What does NAFTA stand for? What is it?
4. How have agreements like NAFTA impacted
the American economy and lives of average
American workers?
ROGER AND ME
• PART 1
• 2 Columns
• RECORD EXAMPLES OF “ECONOMIC
HARDSHIPS”.
• RECORD PROBLEMS THAT LED TO
THE HARDSHIPS “SOURCES OF
ECONOMIC HARDSHIPS” IDENTIFIED
BY THE NARRATOR.
Roger and Me
• What negatives do you see to outsourcing?
• What positives do you see to outsourcing?
• If you were a CEO in today’s highly
competitive global economy, would you
outsource if given the opportunity to move
your business to…say China or Mexico?
Explain.
• What is the solution if any to this problem?
INSTRUCTIONAL GOAL #7
• WILL BE ABLE TO DESCRIBE
HOW CONSUMERS AND
PRODUCERS INTERACT IN A
FREE MARKET ECONOMY.
SUPPLY
• The quantity of a commodity that is
available for purchase at a
particular price.
DEMAND
The desire to purchase, coupled
with the power to do so.
Supply and Demand
The market price is
determined by both the
supply and demand for
it.
The price level of a
good is determined by
the point at which
quantity supplied
equals quantity
demanded.
BUSINESS CYCLE
PRODUCTS
BUSINESS
PRODUCER
EMPLOYER
INDIVIDUAL
CONSUMER
EMPLOYEE
LABOR
PARTICIPATION
• WHAT CAN BE DONE TO INCREASE ANY OF
THESE, EXPLAIN HOW.
•
SKILLED LABOR FORCE
•
NUMBER OF JOBS
•
AMOUNT OF A PRODUCT CONSUMED
•
AMOUNT OF A PRODUCT PRODUCED
INSTRUCTIONAL GOAL
• WILL BE ABLE TO EXPLAIN HOW
FEDERAL RESERVE USES MONETARY
TOOLS TO REGULATE THE NATION’S
MONEY SUPPLY AND HOW THIS
IMPACTS OUR ECONOMY.
PRIMING THE PUMP
• THE GOVERNMENT GETS MONEY INTO THE
ECONOMY ( TAX REFUNDS, GOVERNMENT
FUNDED JOBS) TO DRIVE THE BUSINESS CYCLE
IN A POSITIVE DIRECTION.
FEDERAL RESERVE BANK
• A 12 BANK SYSTEM.
• THE ‘FED’ CONTROLS THE ‘PRIME’ INTEREST
RATE, MANY LOANS TIED TO THIS FIGURE.
• THE HIGHER THE INTEREST RATE, THE FEWER
LOANS ARE MADE AND THE SUPPLY OF MONEY
DECREASES.
• THE LOWER THE INTEREST RATE, THE LESS
PEOPLE OWE ON THEIR LOANS, THEY MAY
THEN SPEND MORE AND FUEL THE ECONOMY
BANKING
INTEREST PAID
INTEREST EARNED
DEPOSITORS
BORROWERS
10 Trillion and Counting
• Complete chart as video plays.
VIDEO PREVIEW
• BUDGET DEFICIT-GOVERNMENT SPENDING THAT IS MORE
THAN IT’S INCOME
• NATIONAL DEBT- THE MONEY A COUNTRY OWES TO
LENDERS AS A RESULT OF MANY ANNUAL BUDGET
DEFICITS.
• RECESSION- A PERIOD OF SLOW OR NEGATIVE ECONOMIC
ACTIVITY USUALLY INCLUDES RISING UNEMPLOYMENT.
• ECONOMIC STIMULUS- A TAX CUT OR INCREASE IN
GOVERNMENT SPENDING DESIGNED TO INCREASE
ECONOMIC ACTIVITY
• BALANCED BUDGET-EXPENDITURES WILL EQUAL INCOME
VIDEO VOCABULARY
• BOND – AN INVESTMENT, WHERE A BOND(PROMISE TO
BE REPAYED WITH INTEREST) IS SOLD TO SOMEONE ELSE
• GROSS DOMESTIC PRODUCT (GDP) – THE TOTAL VALUE
OF A COUNTRY’S ANNUAL OUTPUT OF GOODS AND
SERVICES.
• MONETARY POLICY – THE REGULATION OF MONEY
SUPPLY USUALLY BY CONTROLLING THE INTEREST RATE.
ACT Word 1/25/11
• Immutable (adj.). Not susceptible to change.
112th CONGRESS
• 3 NEW HOUSE RULES
•
ALL BILLS MUST SHOW CONSTITUTIONAL BASIS
•
ALL BILLS SHOW HOW IT WILL BE PAID FOR, NO
DEFICIT SPENDING (PAYGO)
•
LIMITED USE OF CELL PHONES
PARTICIPATION
• WHAT ARE ENTITLEMENTS AND HOW DO THEY
IMPACT THE FEDERAL BUDGET?
• WHAT WAS THE TAX POLICY, UNDER GEORGE BUSH?
HOW DID THIS SEEM TO IMPACT THE ECONOMY?
• WHAT WAS THE SPENDING POLICY, UNDER GEORGE
BUSH, HOW DID THIS SEEM TO IMPACT THE
ECONOMY?
• GIVEN THE EVENTS OF 9/11 WHAT WOULD YOU
HAVE DONE, AS PRESIDENT, CONSIDERING NATIONAL
DEFENSE AND OUR ECONOMY?
State of the Union
• You are to write a solid paragraph making your
predictions on what will be the main issues
that Barak Obama will address tonight in the
State of the Union Address. What will he say
about these issues, what will be the
Republican response to him?
ACT Word 1/31
• Impudent (adj.). Rude, improper.
• Incessant (adj.). Without interruption.
• Inclination (noun). A tendency, propensity
INSTRUCTIONAL GOALS
• WILL IDENTIFY THE VARIOUS TYPES
OF TAXES LEVIED BY CONGRESS ON
AMERICANS.
• WILL COMPARE AND CONTRAST
PORPORTIONAL, PROGRESSIVE AND
REGRESSIVE TAXES.
3 Basic Categories of Taxes
• Regressive Taxes
• Progressive Taxes
• Proportional Taxes
REGRESSIVE TAX
• A tax imposed in such a manner
that the tax rate decreases as the
amount subject to taxation
increases.
• Business, Marriage, Fishing
Licenses
PROGRESSIVE TAX
• Is a tax by which the tax rate
increases as the taxable base
amount increases.
• Income Tax
PROPORTIONAL TAX
• A tax imposed so that the tax
rate is in proportion to the
amount subject to taxation.
• Sales Tax
Warm Up 1/10
1. What are the 3 basic categories of taxes here
in the US?
2. Which category of tax best describes income
taxes here in the US. Explain that type of tax.
3. Which category of tax best describes sales
taxes here in the US. Explain it.
4. Which category of tax best describes joint
marriage tax filing here in the US. Explain it.
Warm Up 1/11
1. What is the “main tax” in America?
2. Business taxes are also called what?
3. What types of things are included in payroll
taxes?
4. How are the most common types of capital
gains taxes created?
5. What are sales taxes also known as?
INSTRUCTIONAL GOAL #8
• WILL BE ABLE TO DESCRIBE THE
IMPACT OF EDUCATION,
CAREER CHOICE, GEOGRAPHY,
AND WORK HABITS WILL HAVE
ON FUTURE EMPLOYMENT AND
JOB SECURITY.
C&C
• DEVELOP A LIST OF THE MOST SIGNIFICANT
VARIABLES ON INCOME LEVEL.
INCOME POTENTIAL
INCOME POTENTIAL
• SUPPLY AND DEMAND INTERACT
• WHAT CAN PUT YOU MORE IN DEMAND THAN
ANOTHER POTENTIAL EMPLOYEE?
• EDUCATION
• DROPOUTS  AVERAGE $8.00 PER HOUR
• HS  $11 SOME COLL$14 COLL$23
• ADVANCED DEGREE  $30 AND HOUR$62,000
INTRUCTIONAL GOAL #9
• WILL ANANLYZE EARNING
STATEMENT AND IDENTIFY
IMPORTANT INFORMATION; GROSS
WAGES, BENEFITS, TAXES AND MISC.
DEDUCTIONS.
Sample Paystub
INSTRUCTIONAL GOAL #8
• WILL BE ABLE TO RELATE
FEDERAL GOVERNMENT
SPENDING AND TAX POLICY TO
THE HEALTH OF OUR ECONOMY.
INTRUCTIONAL GOAL
• WILL ANANLYZE EARNING
STATEMENT AND IDENTIFY
IMPRORTANT INFORMATION; GROSS
WAGES, BENEFITS, TAXES AND MISC.
DEDUCTIONS.
INSTRUCTIONAL GOAL
• WILL BE ABLE TO MAKE ECONOMIC
CHOICES BECAUSE YOU CAN’T HAVE
ALL THE GOODS AND SERVICES THAT
YOU MAY WANT.
INSTRUCTIONAL GOAL
• USE FINANCIAL REPORTS ( BANK
STATEMENTS, STOCK MARKET
REPORTS, MUTUAL FUND
STATEMETNS) TO MAKE AND
ANALYZE DECISIONS ABOUT
PERSONAL FINANCE.
INSTRUCTIONAL GOAL
• WILL BE ABLE TO SHOW RELATION
BETWEEN TARIFFS, QUOTAS,
SUBSIDIES, TRADE AGREEMENTS
AND MEMBERSHIP ECONOMIC
ORGANIZATIONS SIGNIFICANTLY
IMPACTS INTERNATIONAL TRADE.