Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Foundations American Civilization 10 Name Date Period ECONOMIC REVIEW WHY 3 Key Economic Questions Different answers to each question, as well as people’s views on their economic goals, creates different types of economies. What goods and services should be produced? How should goods and services be produced? Who consumes the goods and services? WHAT An economic system is the method used by a society to make and distribute goods and services. There are 3 types. MARKET (Capitalist, free-Enterprise) CENTRALLY PLANNED MIXED ( Command, Socialist, Communist) (Social Democratic, Liberal Socialist) Economic system based on private ownership of production, free markets, and the right of individuals to make most economic decisions. Central government planners make most economic decisions for the people. In theory, the workers own the means of production, in practice, the government does. A mix of socialism and free enterprise, in which the government plays a significant role in making economic decisions. United States Germany, Canada, Japan China, Cuba, North Korea France, Italy, Russia, India, United Kingdom 1. Which has the least amount of government interaction? 2. Which has the most? 3. What is the main type of economic system in the United States? GROSS DOMESTIC PRODUCT The market value of all goods and services produced in a nation within a specific period of time. MEASURES HOW A NATIONS ECONOMY IS DOING. If the GDP is not increasing, then the economy is probably in a recession. Inflation = Prices increase while wages don’t. The dollar is worth less. Stagflation = inflation + high unemployment Recession = a period of declining economic activity (when the GDP falls for six months in a row) Budget deficit = when the government spends more than it brings in. Federal Reserve System – national banking system that controls the U.S. money supply and the availability of credit in the country. Net Exports GDP Consumer Spending Government Spending Investment What happens if the money supply increases faster than production? SUPPLY & DEMAND This is what determines the price of goods & services. Supply = amount of good or service that is able to be produced at a given price. Demand = amount of goods consumers can buy at a given price. Equilibrium Price = price at which the amount produced and the amount demanded is the same. Market operates efficiently. Surplus = more goods than people want Shortage = people want more goods than what is available. Surplus Shortage = Equilibrium Price Supply Price Demand What is the point at which supply and demand intersect known as? When does a surplus occur? When price goes up, what happens to supply? To demand? THE STOCK MARKET or STOCK EXCHANGE A place where stocks and bonds are bought and sold. Large companies sell stocks (or shares) of ownership in their companies in order to raise money. Individuals invest in securities to make a profit. The sale of securities takes place in the stock exchange. The largest exchange in the U.S. is the New York Stock Exchange. Activity on this and other exchanges signals how well the economy is doing. Dow Jones Industrial Average – based on the prices of the stocks of 30 large companies, often used to indicate how the stock market is doing. THE AMERICAN ECONOMY Producers & consumers motivated by self-interest. To make more money, producers try to make goods and services that consumers want. Producers engage in competition (by lowering prices, advertising, improving quality) to get more people to buy goods. Consumers serve self interest by purchasing the best goods & services for the lowest price. Government plays a limited but important role. INDIVIDUALS Demands Goods Supplies Goods PRODUCT MARKET Create demand Offer Labor PRODUCERS Send goods to market Sells goods and services Hires Labor GOVERNMENT Collects Taxes Offers Services Regulates Economy Equalizes distribution of wealth Create goods Hire Labor