Download Economics - Crestwood Local School District

Economics
Economics-how people exchange goods and services
 How do different economic systems meet their peoples economic needs
-Limited Resources- trying to meet unlimited needs
-Scarcity- the inability of our existing resources to meet our wants (how to overcome lack of resources)
Economies;
1. Traditional-follow same occupations that their ancestors did/ Trading Farm Products/ FEUDALISM
2. Command (Planned) (Dictatorship) - Govt. or ruler decides how to answer scarcity (you will do this!)/ Order
subjects to do specific kinds of work/ Tell you what clothes to wear/
3. Market-individuals enjoy the freedom of making their own economic decisions, invest own time and money to
make a profit/ producer of goods/ consumers that buy goods/ UNITED STATES
 Private Property
 Freedom of Enterprise-people are free to enter what they want/ occupations
 Competition and consumer choice
 Role of the government- establishes laws, controls currency, education, defense (politics), regulate
trade, tariffs, (export and import)
 Supply and Demand- how much you have and how much people want
4. Mixed- combination of all three different economies (US)
Profit- making money!!!!!!!!!!!!!!!!
America’s Government- laissez-faire in old times
Relief Reform Recovery
1. Power to provide public goods (weapons, roads)
2. Redistribution of income/ Graduated- wealthier taxpayers pay their income taxes at higher rates
3. Power to regulate economic activities
 Sherman Antitrust Act- prohibited monopolies that engaged in unfair practices (Progressive Era)
4. Fiscal Policy- The Federal Govt. is able to influence the economy by is spending, taxing, and borrowing
- Federal, state and local govts raise most of the money they need to pay for public goods and services through
taxes.
 Bond- pay a fixed interest rate to investors who buy them
 Inflation- (rising prices) the govt. may increase taxes- slows down economy- producers lower prices
5. Monetary Policy- another tool the govt. uses to promote economic stability and growth.
6. Federal Reserve System- agency that controls the ability of banks to lend money
7. Trade Policy- Federal govt. regulates American trade with other countries
 Tariffs- special taxes on imported goods. Once tariffs were imposed to raise revenue for the govt.
 Quotas- restrictions on the number of goods that a particular foreign country can import in the US.
 Blockade or Embargo- complete prohibition of trade with another country
Protectionism-using tariffs, quotas, blockades to protect U.S. businesses from foreign competition
Free trade-removing these policies to allow for competition & eliminate monopolies so Americans can buy cheaper
goods…Those countries will then allow our products to enter without high protectionist policy
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Economics
• Market economy (the basis for several “right-wing” systems, such as capitalism)
• Mixed economy (arguably the “centrist” economic system).
• Planned economy (the basis for several “left-wing” systems, such as socialism)
• Traditional economy (a generic term for the oldest and traditional economic systems)
• Participatory economics (a recent proposal for a new economic system)
A planned economy is an economic system in which decisions about the production, allocation and
consumption of goods and services is planned ahead of time, in either a centralized or decentralized fashion
A market economy is an economic system in which goods and services are traded with the price at which
goods and services are exchanged being determined by trades that occur as a result of sellers’ asking
prices matching buyers’ bid prices.
Role of Govt in American Economy
Promote maximum employment, promote maximum, limit inflation
The Federal Reserve System is the central banking system of the United States
Controls ability of banks to lend money.
Lends $ to banks at its own interest rate.
Raise, lower interest rates
Balance of Trade
The difference between the value of its imports and the value of its exports.
Trade, specialization, and interdependence aqil affect how the U.S. economy performs.
Labor unions and farm and business organizations help shape the U.S. economy.
World Trade Organization (W.T.O)
North American Free Trade Agreement (NAFTA)
European Union (E.U.)
Better Business Bureau (BBB)
Local, nonprofit group of businesses set up to protect consumers against false advertising and bad business
practices.
Govt and the Economy
-The Great Depression and. WWII led the govt. to play a greater role in economic matters.
-The U.S. govt provides public services, redistributes income, regulates economic activity, and promotes
economic growth and stability.
Key Terms: Taxes, Public Goods and Services, The Federal Budget, Deficit, Surplus