1.01 clay ppt
TRANSCRIPT
ESSENTIAL STANDARD 1.00:Understand economic activities of individuals and families.
OBJECTIVE 1.01 Understand responsible earning, spending, saving, and
borrowing.
Essential Questions
What are four basic economic activities of consumers?
What does it mean to be responsible when earning, spending, saving, and borrowing?
Consumer Economic Activities
EARNING
SPENDING
BORROWING
SAVING
When these activities are handled responsibly, individuals are more likely to achieve financial security and personal satisfaction.
How will you handle these four activities?
How financially successful will you be?
What are the four basic economic activities of consumers?
EARNING
SAVING BORROWING
SPENDING
Consumer Economic Activities Market
Economy- consumers respond to the economy as they wish in earning, spending, saving and borrowing behaviors
Other names for Market economy- capitalism, free enterprise system, private enterprise system
EARNING Earning --- gaining
money by working, owning a business, or receiving investment returns.
Money gained from earning is called earnings.
A person’s career choices, ability to find employment, and ability to advance determine his or her expected earnings and standard of living.
Factors affecting career choices, ability to find employment, and ability to advance are shown in following slides
Standard of Living the style of living
that a person can afford, according to income level
is directly affected by the career choices made by consumers.
Being a Responsible Consumer
Responsible earning involves realizing that career choices greatly affect lifetime earnings and standard of living and considering these factors when making career choices.
Brainstorm other words or phrases describing Responsibility .
Write your list.
Being a Responsible Consumer
Other words describing Responsibility Answerable Accountable Duty Reliable Dependable
Other phrases describing Responsibility Capable of making
moral or rational decisions
Legally or ethical accountable
Having to pay debts Good judgment Being trusted
CAREER CHOICE FACTORS AFFECTING EARNINGS
What are you considering as a career?
What type of work will you do?
How much will you earn?
What will the location of your work look like?
How will your career choice affect your standard of living?
CAREERCHOICES
TYPE OF CAREER/JOB
PLACE OF EMPLOYMENTEARNINGS
WHAT CAREER CHOICE FACTORS AFFECT ABILITY TO FIND EMPLOYMENT?
What employment skills do you have?
What economic conditions such as recession, recovery, or prosperity affect job search?
Is there a lot of competition for jobs in your field?
Does your experience affect ability to find employment?
How does your employment skills affect your chances of getting the job?
ABILITY TO FIND EMPLOYMENT
EDUCATION LEVEL
ECONOMIC CONDITIONS
WORKPLACE TRENDS AND OPPORTUNTIES
PRIOR JOB PERFORMANCE
EMPLOYMENT SKILLS
WHAT CAREER CHOICE FACTORS AFFECT ADVANCEMENT?
How do economic
conditions affect ability to advance?
Is there room in this job for advancement?
How does my job performance affect advancement?
What trends or opportunities can be identified?
How does my education affect advancement?
ABILITY TO ADVANCE
TYPE OF CAREER OR JOB
JOB PERFORMANCE
EDUCATIONAL LEVEL ATTAINED
WORKPLACE TRENDS AND OPPORTUNITIES
ECONOMIC CONDITIONS
Earnings Review
What three things generate earnings/money?
1.2.3.
Does Money Grow on Trees?
video link "I want money"
What Generates Money?
Working at a job
Owning a business that makes profit
Income producing investments
SPENDING
Spending --- using money to purchase goods and services.
The way a person spends money determines the value received and influences the economy.
Responsible spending includes
Researching and planning
Purchasing in advance
Making wise choices in light of opportunity costs and trade-offs that apply
Opportunity costs- the highest valued alternative that is given up when a choice is made
When you have a limited amount of money, how do you spend your money?
BENEFITS OF SPENDING
Each purchase contributes to the demand for the product or service purchased.
Spending keeps economy growing
Spending encourages prosperity (peak) in economic cycle
video link reuters recession
Economic fluctuation -ups and downs in the business cycle
BENEFITS OF SPENDING
Consumer dollars vote! (DEMAND) Affects prices of
goods and services
Affects what producers make (SUPPLY)
Affects what retailers stock on shelves for consumers
Name 2 products that are no longer produced due to low demand.
Name 2 new products that are available due to increased demand.
Are goods marked as clearance usually high or low demand?
Do you eat green catsup? Can you find it on the grocery shelf ?
Responsible spending includes researching and planning purchases in advance and making wise choices in light of opportunity costs and trade offs that apply.
Gross Domestic Product (GDP)
Dollar value of all the final goods and services produced by a nation in one year
Frequently used as measurement to determine how well an economy is performing
Gross Domestic Product
GOODS
SERVICES+
link to gdp per capita by country
SCARCITY
Have you heard news about scarcity in these areas? What other items that are scarce affect your life? Time
Only 24 Hours in Day Money Food Water Jobs Positions on ball team Attractive girls/guys in your
class # of acceptances for the
college of your choice
Law of Scarcity: An economic system cannot
produce all goods and services that consumers want, and
Most consumers do not have the resources to purchase everything they want
Choices must be made about how limited resources are used
Did you make any choices today due to scarcity?
Trade-offs and Opportunity Costs
When making a choice, other alternatives must be sacrificed
The highest-valued alternative that must be given up when a choice is made is the opportunity cost of the choice.
The choice of one item while giving up another is called a trade-off.
Lisa only has $1 after buying a ticket to the basketball game. Which item would you choose if you were Lisa? Box of popcorn Candy bar Soda 50/50 raffle ticket Give $ to friend
needing just one more $ to buy game ticket
Save for later purchaseopportunity cost video link
SAVING
Saving --- putting aside money for later use
Money may be “saved” in a bank account or in a wallet
The form of savings used determines the financial return Saving in your wallet
does not earn interest on your money!
“Later Uses” for Savings Emergencies Recurring expenses Future purchases Financial goals Retirement
Name three items you would be willing to save up $ to purchase
BENEFITS OF SAVING
Benefits of Saving Provide money for future
purchases Can be used to earn
income Produce a healthy economy Increase personal financial
security Provide growth
opportunities for business ventures
Purchasing durable goods is considered a form of savings
Responsible saving means forming the habit of saving regularly and finding forms of saving that yield high returns
Examples of Durable goods- Bricks, jewelry, refrigerators, cars, mobile phones, household goods, consumer electronics, sports equipment
Consumables- opposite of durable goods,Also called soft or non-durable goodsUsed up in a short period of time
SAVING
Will the three items you would save for change based on your life stage?
LIFE STAGES 13-19 TEENAGE 20-30 SINGLE YOUNG ADULT 20-30 YOUNG ADULT WITH FAMILY 30-50 MIDDLE AGE 50-65 PRE-RETIREMENT 65+ RETIREMENT
Link: barney's car
Why Save?
Financial Security Having enough savings
to be able to withstand crises and emergencies
Provide for needs Provide for wants What is difference
between needs & wants?
How much do you think you will need in savings to be “financially secure”?
Savings Rate Amount of money
people save in an economy
Americans are saving less and less money while spending more on credit
link to savings rate by country comparison
BORROWING
Borrowing --- obtaining money, goods, or services at present in exchange for the promise of future payment .
“Buy now, pay later” aka CREDIT Borrowing means
spending future income and includes buying on credit.
Having “good credit” depends on one’s willingness and ability to pay back what is owed when it is due.
Credit purchases are more costly than cash purchases if not paid back quickly.
Responsible borrowing means borrowing only what can be paid back when due.
Wise use of credit can help some individuals raise their standard of living by extending their buying power.
BORROWING Reasons for
Borrowing Major purchases Emergencies Convenience Prepare for future
goals Take advantage of
good sales/offers
Examples of Borrowing Buying with a credit card Buying car on an
installment loan Payday loans Cash advances Layaway purchases Home mortgage loans
Interest Interest Rate -
Percentage of amount borrowed to be ADDED to the amount owed and paid back
Interest rates are stated as an Annual Percentage Rate (APR)
Formula to calculate interest is I=PRT I= Interest P=Principal amount
borrowed R=Interest Rate T=Time of loan in years
Example: Beth bought her first car
by borrowing $10,000 at 6% APR from SunTrust Bank.
Interest for one year is $600.
($600 =$10,000 x 1 year x 6%)
(using formula I=PRT) If she pays off the loan in
one year she will pay back $10,000 PLUS $600 interest.
Interest and Inflation
Inflation A general increase
in the cost of goods and services (rising prices)
Inflationary period time when demand
for goods/services is high and prices continue to rise
Example of an Online Interest Rate Calculator