economics halfen final exam review. what is scarcity? scarcity is the idea that there are a limited...
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Economics Economics HalfenHalfen
Final Exam Final Exam ReviewReview
What is scarcity?What is scarcity?Scarcity is the idea Scarcity is the idea
that there are a that there are a limited amount of limited amount of resources to meet resources to meet
unlimited wants and unlimited wants and needs. If you have a needs. If you have a
limited supply of limited supply of workers and cannot workers and cannot
finish a job, that is an finish a job, that is an example of scarcity.example of scarcity.
Why is scarcity a Why is scarcity a basic problem of basic problem of
economics?economics?The definition of The definition of economics is the economics is the study of efforts study of efforts
to satisfy to satisfy seemingly seemingly
unlimited wants unlimited wants with scarce with scarce resources.resources.
Why is choice a basic Why is choice a basic problem of economics?problem of economics?
The whole point of The whole point of economics is trying to economics is trying to understand why people understand why people make the choices they make the choices they make. If you make a make. If you make a
choice, there are costs. choice, there are costs. Economists want to Economists want to
know what costs people know what costs people are willing to sacrifice in are willing to sacrifice in
order to chose the order to chose the alternative.alternative.
What does a What does a production production
possibility curve possibility curve tell you?tell you?
The opportunity The opportunity cost of a decisioncost of a decision Guns
Butter
What is What is opportunity cost?opportunity cost?
The most The most desirable desirable
alternative given alternative given up for the up for the decisiondecision
What is a What is a traditional traditional
system?system?A system where A system where the economy is the economy is
based on based on customs, habit, customs, habit,
and ritualand ritual
Give an example Give an example of a traditional of a traditional
system.system.A tribal A tribal
community in community in AfricaAfrica
What is a command What is a command system?system?
A system where the A system where the government controls government controls
the economy and the economy and makes all economic makes all economic decisions. There is decisions. There is
not a lot of not a lot of uncertainty because uncertainty because
everything is everything is government government controlled.controlled.
Give an example Give an example of a command of a command
system.system.Former Soviet Former Soviet Union, North Union, North
KoreaKorea
What is a market system?What is a market system?A system where the A system where the
economy has little or no economy has little or no government control. The government control. The market is regulated by market is regulated by
competition and motivated competition and motivated by self-interest. It does not by self-interest. It does not
provide for everyone’s provide for everyone’s basic needs. It does basic needs. It does
provide individual freedom provide individual freedom for producers and for producers and
consumers. Consumers consumers. Consumers play a key role in WHAT is play a key role in WHAT is
produced.produced.
Give an example Give an example of a market of a market
system.system.The US The US
(with some (with some government government
intervention)intervention)
How does the U.S. How does the U.S. system compare with system compare with
Russia? France? China? Russia? France? China? Mexico?Mexico?
RussiaRussia is in transition to is in transition to a market system. France a market system. France
has a similar market has a similar market system. system. ChinaChina is in is in transition – moving transition – moving
away from a command away from a command system to a market system to a market
based system. based system. MexicoMexico has a similar market has a similar market
system.system.
What does a circular flow What does a circular flow model tell you?model tell you?
The flow of resources between The flow of resources between households and firms. Product market households and firms. Product market is where money flows from households is where money flows from households
to firms in exchange for goods from to firms in exchange for goods from the firms. The factor market is where the firms. The factor market is where
the money flows from firms in the form the money flows from firms in the form of income to households in exchange of income to households in exchange
for their factors of production for their factors of production
(land, labor and capital).(land, labor and capital).
Households Firms
Factors of ProductionIncome
Payment
Goods and Services
Factor Market
Product Market
Use an example to Use an example to explain the circular flow explain the circular flow
model.model.You go to work for ABC You go to work for ABC inc. in exchange for a inc. in exchange for a paycheck. Then you paycheck. Then you
purchase a shirt from purchase a shirt from ABC inc. in exchange ABC inc. in exchange
for payment. The for payment. The government may take government may take
taxes from your taxes from your paycheck and charge paycheck and charge
taxes on the sale of the taxes on the sale of the goods.goods.
How does How does government government
action affect the action affect the circular flow circular flow
model?model? Regulations over Regulations over production, labor production, labor laws, taxes, etc.laws, taxes, etc.
Who is Adam Who is Adam Smith and why is Smith and why is he important?he important? He was a free He was a free
market market philosopher and philosopher and
a classical a classical economist.economist.
What societal What societal values influence values influence
traditional traditional economies?economies?
Custom, ritual, Custom, ritual, habit, familyhabit, family
What societal What societal values influence values influence
command command economies?economies?Government Government
control, order, control, order, total equitytotal equity
What societal What societal values influence values influence
market market economies?economies?
Freedom, choice, Freedom, choice, self-interest, self-interest, competitioncompetition
What are the What are the economic rights of economic rights of
individuals as individuals as consumers?consumers?
They determine the They determine the products that a free products that a free enterprise economy enterprise economy
provides.provides. Choose who Choose who to purchase from. to purchase from.
Choose what products Choose what products to purchase. Choose to purchase. Choose what price willing to what price willing to
pay.pay.
What are the What are the economic economic
responsibilities of responsibilities of individuals as individuals as consumers?consumers?
They must let They must let producers know what producers know what they want by making they want by making purchasing decisions.purchasing decisions.
What are the What are the consequences of consequences of
economic decisions economic decisions made by individual made by individual
consumers?consumers?If they purchase a If they purchase a
product, that lets the product, that lets the producer know that producer know that there is demand for there is demand for
that productthat product
What are the What are the economic rights of economic rights of
businesses?businesses?They have the right to They have the right to
start any legal start any legal business. They can business. They can
produce whatever will produce whatever will earn them a profit. If earn them a profit. If they are not making they are not making money, they have the money, they have the
right to leave the right to leave the market.market.
What are the What are the economic economic
responsibilities of responsibilities of businesses?businesses?
Disclose required Disclose required information to make information to make
buyers more buyers more knowledgeable and knowledgeable and
safer.safer.
What are the What are the consequences of consequences of
economic decisions economic decisions made by businesses? made by businesses? Positive externalities – Positive externalities – an economic side effect an economic side effect
that generates that generates unexpected benefitsunexpected benefits
Negative externalities – Negative externalities – economic side effect economic side effect
that generates that generates unexpected costunexpected cost
What is profit What is profit motive?motive?
One of the basic One of the basic principles of free principles of free
enterprise. enterprise. Businesses are Businesses are driven by the driven by the
desire to make desire to make money.money.
What ordinances What ordinances and regulations and regulations
must be followed if must be followed if someone wants to someone wants to start a business?start a business? Not Not allall businesses businesses
are required to are required to have licenses.have licenses.
What is voluntary What is voluntary exchange?exchange?
One of the basic One of the basic principles of free principles of free
enterprise. enterprise. Consumers and Consumers and
producers choose producers choose who to buy and sell who to buy and sell
from.from.
What are private What are private property rights?property rights? One of the basic One of the basic principles of free principles of free
enterprise. enterprise. Individuals have the Individuals have the right to own property right to own property
and land. They can and land. They can use it as they wish use it as they wish
and transfer it if they and transfer it if they want to.want to.
What is What is competition?competition?
One of the basic One of the basic principles of free principles of free
enterprise. enterprise. Businesses can Businesses can
adjust their adjust their prices and prices and products to products to
attract attract consumers.consumers.
What are the What are the benefits of benefits of
individual freedom individual freedom to to consumersconsumers in in
the U.S. free the U.S. free market system?market system?
Choice of what to Choice of what to buy, rights, buy, rights,
protection from protection from products and products and businessesbusinesses
What are the What are the benefits of benefits of
individual freedom individual freedom to to producersproducers in the in the
U.S. free market U.S. free market system?system?
Choice of what to Choice of what to sell, rights, sell, rights,
protectionprotection from from consumersconsumers
What is the role What is the role of the of the
government in government in the US free the US free enterprise enterprise system?system?
Regulation (laws, Regulation (laws, taxes), taxes),
protection, protection, assistance assistance
(subsidies)(subsidies)
Why does the Why does the government make government make
rules and regulations rules and regulations in the US free in the US free
enterprise system?enterprise system? Protect consumers Protect consumers through disclosure through disclosure
law (forcing law (forcing companies to give companies to give
consumers consumers information about information about their products and their products and
services) and services) and producers through producers through
regulationsregulations
How does How does technology affect technology affect
productivity? productivity? Improvements in Improvements in technology allow technology allow an economy to an economy to produce more produce more
output from the output from the same or a smaller same or a smaller
quantity of inputs.quantity of inputs.
Analyze the Analyze the ethical policy of ethical policy of
Union Pacific Union Pacific Corp (pg. 74-75)Corp (pg. 74-75)The issue at the The issue at the
center of the center of the debate was toxic debate was toxic waste clean-upwaste clean-up
What causes What causes changes in changes in demand?demand?
According to the According to the law of demand…law of demand…
price. If price goes price. If price goes up, demand goes up, demand goes
down. If price goes down. If price goes down, demand goes down, demand goes
up.up.
Who is Mary Kay Who is Mary Kay Ash and why is she Ash and why is she
important?important?She started Mary She started Mary
Kay cosmetics. She Kay cosmetics. She is one of the most is one of the most successful female successful female
entrepreneurs ever.entrepreneurs ever.
What causes What causes changes in changes in
supply?supply?According to the According to the law of supply…law of supply…price. If price price. If price
goes up, supply goes up, supply goes up. If price goes up. If price
goes down, goes down, supply goes supply goes
down.down.
Why is it Why is it beneficial to have beneficial to have a variety of goods a variety of goods
available?available?More More
competition, competition, lower prices, lower prices,
more choices for more choices for consumersconsumers
What causes What causes changes in price?changes in price?
When supply When supply increases, prices increases, prices fall and quantity fall and quantity
demanded demanded increases to increases to reach new reach new
equilibriumequilibrium
What does a What does a supply and supply and
demand graph demand graph tell you?tell you?Supply
Demand
EquilibriumPrice
Quantity
How do you use a How do you use a supply and demand supply and demand
schedule to schedule to interpret a supply interpret a supply
and demand and demand graph?graph?
Use the numbers to Use the numbers to draw the graph. draw the graph. You cannot use a You cannot use a graph to make a graph to make a
schedule!schedule!
What are What are responsive prices responsive prices and why are they and why are they generally a good generally a good
thing?thing? They can change They can change easily when there easily when there
are shifts in supply are shifts in supply or demand. You do or demand. You do
not end up with not end up with shortages or shortages or surpluses.surpluses.
What is pure What is pure competition?competition?
A market structure A market structure where many buyers where many buyers
and sellers and sellers participate, both are participate, both are well informed about well informed about products, sellers are products, sellers are able to enter and exit able to enter and exit the market freely, no the market freely, no seller sells a product seller sells a product above the prevailing above the prevailing
market price.market price.
Name an Name an example of a example of a
pure pure competition.competition.
TomatoesTomatoes or any or any agricultural agricultural
marketmarket
What is a What is a monopolistic monopolistic competition?competition?
A market A market structure where structure where many companies many companies sell similar but sell similar but not identical not identical
productsproducts
Name an Name an example of a example of a monopolistic monopolistic competition.competition.
Denim Jeans, soft Denim Jeans, soft drinksdrinks
What is an What is an oligopoly?oligopoly?A market A market
structure where structure where few large firms few large firms dominate the dominate the
marketmarket
Name an Name an example of an example of an
oligopoly.oligopoly.Airlines – Also Airlines – Also cartels which cartels which
only work if the only work if the members keep to members keep to
their agreed their agreed output.output.
What is a What is a monopoly?monopoly?A market A market structure structure
dominated by a dominated by a single sellersingle seller
Name an Name an example of a example of a monopoly? monopoly?
AT&TAT&T, Standard , Standard Oil Trust, The Oil Trust, The Public Water Public Water
CompanyCompany
Who is Bill Gates and Who is Bill Gates and why is he important?why is he important?CEO and Chairman of CEO and Chairman of
Microsoft. He Microsoft. He dropped out of dropped out of
Harvard to form his Harvard to form his computer software computer software
company and become company and become one of the richest, one of the richest, most influential most influential
entrepreneurs ever.entrepreneurs ever.
What are the What are the characteristics of sole characteristics of sole
proprietorships?proprietorships?Least regulated form Least regulated form of business, zoning of business, zoning
laws often keep them laws often keep them from doing business from doing business
from home, unlimited from home, unlimited personal liabilitypersonal liability
What are the What are the characteristics of characteristics of
partnerships?partnerships?General partnership- General partnership-
partners share partners share liability. liability.
Limited Liability Limited Liability Partnership (LLP) – Partnership (LLP) –
all partners are all partners are limited from personal limited from personal
liability in certain liability in certain situations.situations.
What are the What are the characteristics of characteristics of
corporations?corporations?A corporation A corporation has a separate has a separate
entity apart from entity apart from that of the that of the owners and owners and
workersworkers
What are the What are the advantages and advantages and disadvantages of disadvantages of
sole sole proprietorships?proprietorships?
Adv – least Adv – least regulatedregulated
Dis – zoning laws, Dis – zoning laws, unlimited personal unlimited personal
liabilityliability
What are the What are the advantages and advantages and disadvantages of disadvantages of
partnerships?partnerships?Adv – in a limited Adv – in a limited partnership you partnership you only lose your only lose your
initial investmentinitial investment Dis – Tied to Dis – Tied to
partner’s actionspartner’s actions
What are the What are the advantages and advantages and disadvantages of disadvantages of
corporations?corporations?Adv- corporation Adv- corporation has a separate has a separate
entity apart from entity apart from owners and owners and
workersworkers Dis – no one person Dis – no one person
in controlin control
What are the major What are the major events in the history events in the history
of the labor of the labor movement in the US?movement in the US?
The Industrial The Industrial Revolution and Revolution and manufacturing manufacturing
initiated the labor initiated the labor movement in the movement in the early 1800s which early 1800s which
changed the face of changed the face of the US labor forcethe US labor force
Who is Karl Marx Who is Karl Marx and why is he and why is he important?important?
He wrote the He wrote the Communist Communist
ManifestoManifesto and and Das Das KapitalKapital
He was the father He was the father of of
communism/socialicommunism/socialismsm
How do people How do people use credit to get use credit to get
more stuff?more stuff?People use their People use their credit cards at credit cards at stores and the stores and the
credit card issuer credit card issuer pays the store.pays the store.
What role does What role does interest play in the interest play in the
use of credit?use of credit?Interest is the Interest is the
money paid for the money paid for the use of credit. It is use of credit. It is
essentially the essentially the “cost” of credit. “cost” of credit.
Interest from loans Interest from loans is the largest is the largest
source of income source of income for banks.for banks.
What do financial What do financial institutions do?institutions do?Bring together Bring together
funds that savers funds that savers provide and then provide and then lend those funds lend those funds to others which to others which
leads to leads to economic economic expansionexpansion
How has the role of How has the role of financial institutions financial institutions changed over time?changed over time?
Expanded investment Expanded investment opportunities, opportunities,
provided additional provided additional services for more services for more people than ever people than ever
beforebefore
How do financial How do financial institutions institutions
affect affect households?households?Investment Investment
opportunities, opportunities, loansloans
How do financial How do financial institutions institutions
affect affect businesses?businesses? Investment Investment
opportunities, opportunities, loans to growloans to grow
What is insurance and What is insurance and why do people insure why do people insure
their stuff?their stuff?Insurance is money Insurance is money paid to an insurer to paid to an insurer to be used in the event be used in the event of an emergency. If of an emergency. If
nothing happens, the nothing happens, the money is usually not money is usually not
paid back to the paid back to the consumer.consumer.
What is the What is the economic impact economic impact
of investing in of investing in the stock the stock market?market?
Gives companies Gives companies the funds to grow the funds to grow and expand their and expand their
businessesbusinesses
What is the What is the economic impact of economic impact of
investing in the investing in the bond market?bond market?
Money is used by Money is used by company/governmecompany/governme
nt to expand and nt to expand and grow. It does not grow. It does not just sit unused just sit unused until it reaches until it reaches
maturity.maturity.
What are the What are the benefits savings benefits savings
accounts?accounts?Safe, guaranteed Safe, guaranteed
interest, interest, extremely liquidextremely liquid
What are the What are the risks of savings risks of savings
accounts?accounts?Virtually none, Virtually none,
low returnlow return
What are the What are the benefits of benefits of
mutual funds?mutual funds?Intermediaries Intermediaries buy short term buy short term financial assets financial assets and investors and investors receive higher receive higher
interest, interest, diversified diversified
investmentinvestment
What are the What are the risks of mutual risks of mutual
funds?funds?Not insured by Not insured by
the FDICthe FDIC
What are the What are the benefits of benefits of
pension funds?pension funds?Often tax-Often tax-deferreddeferred
What are the What are the risks of pension risks of pension
funds?funds?Depends on the Depends on the type but usually type but usually fairly low risk, fairly low risk,
funds restricted funds restricted until retirementuntil retirement
What are the What are the benefits of benefits of insurance?insurance?
Provides funds in Provides funds in the event of an the event of an
emergency emergency (home, life, (home, life,
health)health)
What are the What are the risks of risks of
insurance?insurance?Money is not Money is not
usually paid back usually paid back if there is no if there is no emergencyemergency
What are the What are the benefits of CDs?benefits of CDs?No fees, Insured No fees, Insured by FDIC, higher by FDIC, higher interest than a interest than a
savings account, savings account, safesafe
What are the What are the risks of CDs?risks of CDs?
Minimum Minimum deposits, deposits,
restrictions on restrictions on access to money, access to money,
What are the What are the benefits of benefits of
bonds?bonds?Safe, high Safe, high interest, interest,
bondholders have bondholders have first claim to first claim to
assets if a assets if a company goes company goes
bankruptbankrupt
What are the risks What are the risks of bonds?of bonds?
No access to money No access to money until bond until bond
matures, Junk matures, Junk bonds are very high bonds are very high
risk but have a risk but have a potentially higher potentially higher
return.return.
What are the What are the benefits of benefits of
stocks?stocks?Potentially high Potentially high return, Easily return, Easily
liquidatedliquidated
What are the What are the risks of stocks?risks of stocks?
Very risky, losses Very risky, losses can be large, can be large,
requires requires understanding of understanding of the stock market the stock market
What is the impact of What is the impact of business cycles on US business cycles on US
history? history? During the 90s, there During the 90s, there was a recession, and was a recession, and although inflation although inflation
remained at less than remained at less than 3 percent, 3 percent,
unemployment fell to unemployment fell to very low levels.very low levels.
How is economic How is economic growth growth
measured?measured?Real GDP per Real GDP per
capita because capita because prices and prices and population population
change over timechange over time
How is economic How is economic stability stability
measured? measured? By looking at By looking at general price general price
levelslevels
Who is Andrew Who is Andrew Carnegie and Carnegie and
why is he why is he important?important?He was a He was a
entrepreneur in entrepreneur in the steel industrythe steel industry
What are the economic What are the economic effects of the development effects of the development
of communication and of communication and transportation systems in transportation systems in
the US?the US?Provide easier methods of Provide easier methods of
communicating communicating information and information and
exchanging goods and exchanging goods and services. For example, the services. For example, the internet has made a huge internet has made a huge impact on the economy.impact on the economy.
When new technologies When new technologies emerge, what economic emerge, what economic effect do they have on effect do they have on the “old way of doing the “old way of doing
things”?things”?An example…a An example…a
country’s production country’s production possibilities increase possibilities increase because the workers because the workers
become more skilled at become more skilled at using a computer. This using a computer. This is an example of growth is an example of growth caused by technology.caused by technology.
How do technological How do technological innovations change innovations change the way goods are the way goods are
manufactured, manufactured, marketed and marketed and distributed?distributed?
They generally make They generally make manufacturing, manufacturing, marketing and marketing and
distribution easier distribution easier and less expensive.and less expensive.
Give some examples Give some examples of types of economic of types of economic information available information available
as a result of as a result of technological technological innovations?innovations?
Stock prices on the Stock prices on the internet, economic internet, economic
news in the news in the newspaper, Fed newspaper, Fed
announcements on announcements on CNNCNN
How do scientific How do scientific discoveries and discoveries and technological technological
innovations create the innovations create the need for rules and need for rules and
regulations to protect regulations to protect individuals and individuals and
businesses?businesses?The growth of the The growth of the
internet has made it internet has made it necessary for the necessary for the
government to make government to make regulations regarding regulations regarding
the security of the security of information onlineinformation online
What are the effects What are the effects of unequal of unequal
distribution of distribution of economic factors of economic factors of
production?production? Unequal distribution Unequal distribution of the 4 factors (land, of the 4 factors (land, labor, human capital, labor, human capital,
physical capital) physical capital) inhibits economic inhibits economic
growthgrowth
How is full How is full employment employment measured?measured?
When there is no When there is no cyclical cyclical
unemployment unemployment (does not take into (does not take into account dropouts)account dropouts)
What kinds of taxes What kinds of taxes are paid at the are paid at the local level and local level and
what are they used what are they used for?for?
Most of the tax Most of the tax money goes to money goes to elementary and elementary and
secondary secondary educationeducation
What kinds of taxes What kinds of taxes are paid at the are paid at the state level and state level and
what are they used what are they used for?for?
Sales and income Sales and income taxes provide the taxes provide the most revenue in most revenue in
most statesmost states
What kinds of What kinds of taxes are paid at taxes are paid at the national level the national level
and what are and what are they used for?they used for?Most money Most money comes from comes from
income taxes. income taxes.
What are the What are the different different
categories of categories of revenues in the revenues in the
US federal US federal budget?budget?
Taxes and non-Taxes and non-tax revenuetax revenue
What are the What are the different categories different categories of expenditures in of expenditures in
the US federal the US federal budget?budget?
Fastest growing Fastest growing category of category of
expenditures in expenditures in recent years has recent years has been entitlement been entitlement
programsprograms
What is taxation What is taxation and why are taxes and why are taxes
included in the included in the Constitution?Constitution?To provide for To provide for
common defense common defense and general and general
welfare (they must welfare (they must be the same in be the same in every state)every state)
How have taxes How have taxes impacted impacted
contemporary contemporary issues and issues and policies?policies?
One of the major One of the major challenges facing challenges facing
the federal the federal government is the government is the
rapid growth of rapid growth of entitlementsentitlements
What are the What are the major goals of US major goals of US economic policy?economic policy?Growth, stability, Growth, stability, balanced budget, balanced budget,
reduced debt, reduced debt, employmentemployment
What impact do fiscal What impact do fiscal policy decisions have policy decisions have
on the economy?on the economy?Fiscal policy is the Fiscal policy is the use of taxing and use of taxing and
spending to influence spending to influence economic activity. economic activity. Policies can either Policies can either
cause the economy to cause the economy to expand or contractexpand or contract
Who is John Who is John Maynard Keynes Maynard Keynes
and why is he and why is he important?important?
He developed He developed Keynesian Keynesian
economics which economics which takes a broader takes a broader
view of the view of the economy than economy than
classical economicsclassical economics
What is the Fed and why is What is the Fed and why is the Federal Reserve the Federal Reserve
System set up the way it System set up the way it is?is?
12 districts, to make sure 12 districts, to make sure every state has access to every state has access to
the Fed.the Fed. It was created to It was created to provide consumers provide consumers
w/access to funds for w/access to funds for business expansion. The business expansion. The
Fed coordinates regulatory Fed coordinates regulatory activities and examines activities and examines
banksbanks
What are the 3 What are the 3 basic tools used to basic tools used to
implement US implement US monetary policy?monetary policy?The buying and The buying and
selling of selling of government government
securities, reserve securities, reserve requirements, requirements, discount ratediscount rate
Why are economic Why are economic policies used and what policies used and what
effect do they have?effect do they have?Monetary policies are Monetary policies are
use to control the use to control the money supply. They are money supply. They are
used to lessen the used to lessen the effect of natural effect of natural business cycles. business cycles.
Expansionary policies Expansionary policies are used to increase are used to increase
output and create jobsoutput and create jobs in the short termin the short term
Where is oil an Where is oil an abundant abundant resource? resource?
The middle eastThe middle east
Why is this an Why is this an issue for the US?issue for the US?We use a lot of We use a lot of
oil. It is the oil. It is the largest category largest category of nonrenewable of nonrenewable energy in use in energy in use in
the USthe US
What is absolute What is absolute advantage?advantage?
A term related to A term related to nations engaged in nations engaged in
trade. When a trade. When a nation can make nation can make
the most of the most of something given all something given all
of the resources of the resources availableavailable
What is What is comparative comparative advantage?advantage?
A term related to A term related to nations engaged in nations engaged in
trade. When a trade. When a nation can make nation can make
the most of the most of something with the something with the least opportunity least opportunity
cost involved.cost involved.
How does How does comparative comparative
advantage affect advantage affect how and why how and why
countries trade?countries trade?Sometimes Sometimes
countries will countries will import a good they import a good they are able to produce are able to produce because their trade because their trade
partner has the partner has the comparative comparative advantage.advantage.
What is the impact of What is the impact of US imports on the US US imports on the US
and its trading and its trading partners?partners?
If a country reduces If a country reduces their imports into our their imports into our country, the demand country, the demand
for comparable for comparable domestic goods will domestic goods will
most likely increase.most likely increase.
What is the impact of US What is the impact of US exports on the US and its exports on the US and its
trading partners?trading partners?If we reduce our exports, If we reduce our exports,
the demand for those the demand for those goods MAY OR MAY NOT goods MAY OR MAY NOT change. There is no way change. There is no way
to tell for sure. Some to tell for sure. Some goods may increase in goods may increase in
demand while others will demand while others will decrease because people decrease because people
will find alternativeswill find alternatives
Why do exchange Why do exchange rates fluctuate?rates fluctuate?
They are They are influenced by influenced by
supply and supply and demanddemand in a in a flexible rate flexible rate
system.system.
How changes in How changes in exchange rates of world exchange rates of world
currencies affect the currencies affect the balance of trade?balance of trade?If the currency If the currency depreciates, the depreciates, the
country’s products will country’s products will become cheaper to become cheaper to
other nations. If the other nations. If the currency appreciates, currency appreciates, the country’s products the country’s products
will become more will become more expensive in other expensive in other
nations.nations.
How does free How does free trade affect trade affect
economic activity?economic activity?Free trade makes it Free trade makes it
easier for easier for importers and importers and exporters to do exporters to do their businesstheir business
How do trade barriers affect How do trade barriers affect economic activity?economic activity?
They restrict the growth of They restrict the growth of export industries in export industries in
developing countries. If trade developing countries. If trade barriers are used to make barriers are used to make domestic goods cheaper, domestic goods cheaper,
domestic manufacturers may domestic manufacturers may lose the economic incentive lose the economic incentive to become more efficient.to become more efficient.
Tariffs also help shield infant Tariffs also help shield infant industries from competitionindustries from competition
What are some What are some benefits to benefits to
participating in a participating in a free trade free trade
agreement?agreement?Trade barriers and Trade barriers and tariffs are reduced tariffs are reduced
or eliminated, or eliminated, trade significantly trade significantly
increasesincreases
What are the costs of What are the costs of participating in a free participating in a free
trade agreement?trade agreement?Jobs can be Jobs can be
eliminated in one or eliminated in one or both countries both countries (although with (although with
NAFTA an equal NAFTA an equal number of jobs were number of jobs were
created and created and eliminated)eliminated)
Describe the level of development in Describe the level of development in the US, Mexico, Iraq, China, India, the US, Mexico, Iraq, China, India,
Russia, Germany, Afghanistan, Brazil, Russia, Germany, Afghanistan, Brazil, and Indonesia.and Indonesia.US – developedUS – developed
Mexico- developedMexico- developedIraq – underdevelopedIraq – underdeveloped
China – developingChina – developingIndia- developingIndia- developing
Russia- developingRussia- developingGermany- developedGermany- developed
Afghanistan- underdevelopedAfghanistan- underdevelopedBrazil – developingBrazil – developing
Indonesia – underdevelopedIndonesia – underdeveloped
How do societal values How do societal values affect the economic affect the economic
development of nations?development of nations?Societies who value Societies who value
tradition, habit, ritual and tradition, habit, ritual and custom develop much custom develop much slower than those who slower than those who
value self-interest, value self-interest, competition, and freedom. competition, and freedom.
Things like $ from Things like $ from weapons, corrupt leaders weapons, corrupt leaders
and colonialism all and colonialism all prevent developmentprevent development
What are property What are property rights?rights?
A set of laws that A set of laws that protect people’s protect people’s
claim to land and claim to land and other property. If other property. If
property rights are property rights are certain, certain,
entrepreneurs are entrepreneurs are more likely to more likely to
make large make large investments.investments.
Trace Transition of Trace Transition of USSRUSSR
Lenin comes to powerLenin comes to power The govt. organizes land into The govt. organizes land into
state farmsstate farms Gorbachev implements glasnost Gorbachev implements glasnost
and perestroikaand perestroika Yeltsin is elected in the 1Yeltsin is elected in the 1stst
democratic electiondemocratic election Gorbachev resigns; end of USSRGorbachev resigns; end of USSR
Trace Transition of Trace Transition of ChinaChina
Mao Zedung comes to powerMao Zedung comes to power The Great Leap ForwardThe Great Leap Forward The Cultural RevolutionThe Cultural Revolution Deng Xiaoping comes to powerDeng Xiaoping comes to power People’s communes are People’s communes are
replaced with contract replaced with contract responsibilityresponsibility
What is interest?What is interest?
The money you pay to borrow The money you pay to borrow moneymoney
The percentage of principle The percentage of principle paid to investors as an paid to investors as an incentive to invest money.incentive to invest money.
It is the “cost” of creditIt is the “cost” of credit It is the primary source of It is the primary source of
income for banksincome for banks
How do you eliminate How do you eliminate Credit Card Debt?Credit Card Debt?
Stop charging/using the credit Stop charging/using the credit cardscards
Pay off the cards with the highest Pay off the cards with the highest interest rates firstinterest rates first
Pay more than the minimum Pay more than the minimum payment even if it is just a few payment even if it is just a few dollarsdollars
Be very careful about companies Be very careful about companies who claim they will help you who claim they will help you eliminate debt and fix your credit!eliminate debt and fix your credit!
What are you rights when What are you rights when buying a home?buying a home?
You can hire a realtorYou can hire a realtor You can tour the propertyYou can tour the property You can have a pre-sale You can have a pre-sale
inspection doneinspection done You have a certain amount of You have a certain amount of
time to change your mind time to change your mind once you sign the contractsonce you sign the contracts
What are your What are your responsibilities when responsibilities when
buying a home?buying a home? You must secure financing…You must secure financing…
qualify for a mortgagequalify for a mortgage You must be present at the You must be present at the
closingclosing
How can you prepare to How can you prepare to make the change from make the change from
renting to buying?renting to buying? Save a down-paymentSave a down-payment Do your researchDo your research Save a “rainy day” fund in Save a “rainy day” fund in
case of emergencycase of emergency Pay down any debt you might Pay down any debt you might
havehave
What are the steps to What are the steps to starting up a small starting up a small
business?business? Research/Design/EducationResearch/Design/Education In some cases, In some cases,
licenses/certificationslicenses/certifications ProductionProduction MarketingMarketing SalesSales AccountingAccounting
How and why should How and why should someone invest in the Stock someone invest in the Stock
Market?Market? How?How?
Meet with a stock Meet with a stock broker/financial advisorbroker/financial advisor
Research companiesResearch companies Why?Why?
Potentially large returnsPotentially large returns
How do you plan for How do you plan for retirement?retirement?
401K401K IRA/Roth IRAIRA/Roth IRA Pension/Company RetirementPension/Company Retirement Mutual FundMutual Fund Do not rely on Social Do not rely on Social
Security!!!!Security!!!!
How should you start saving How should you start saving money?money?
Pay yourself first…direct Pay yourself first…direct deposit money into a savings deposit money into a savings account straight out of your account straight out of your paycheck so you never miss it.paycheck so you never miss it.
Cut expenses that are not Cut expenses that are not necessary (Starbucks, fast necessary (Starbucks, fast food, etc.) and put that money food, etc.) and put that money into savings.into savings.
What are the different types What are the different types of bank accounts?of bank accounts?
SavingsSavings CheckingChecking
Interest bearingInterest bearing General UseGeneral Use
Money MarketMoney Market Certificate of DepositCertificate of Deposit
How do you balance a How do you balance a checkbook?checkbook?
Get balance from bank Get balance from bank statementstatement
Add any outstanding depositsAdd any outstanding deposits Subtract any outstanding Subtract any outstanding
checks/debitschecks/debits Compare the balance to your Compare the balance to your
account registeraccount register
How and why should you How and why should you take out a loan?take out a loan?
How?How? From a bank or credit unionFrom a bank or credit union Not a pawn shop or check cashing Not a pawn shop or check cashing
outlet!outlet! Why?Why?
Car LoanCar Loan Home LoanHome Loan Student LoanStudent Loan NOT spending money, big screen TV, NOT spending money, big screen TV,
etcetc
Who needs to be insured Who needs to be insured and how do you get and how do you get
insuranceinsurance Who?Who?
Life: young families with childrenLife: young families with children Car: everyone…it’s the law!Car: everyone…it’s the law! Health: everyone!!Health: everyone!! Homeowners/Renters: everyone!!Homeowners/Renters: everyone!!
How?How? Contact an insurance company to Contact an insurance company to
applyapply Sign up through workSign up through work
How and why should you How and why should you give to charity?give to charity?
How?How? Research…BBB online, Atty. Research…BBB online, Atty.
Gen officeGen office Why?Why?
Others needier than yourselfOthers needier than yourself Tables could be turnedTables could be turned Good karma!Good karma!
What scams are out there What scams are out there and how do you avoid them?and how do you avoid them? Many scams are out there to prey Many scams are out there to prey
on people who do not know any on people who do not know any better or are desperate for $$.better or are desperate for $$.
If it sounds too good to be true, it If it sounds too good to be true, it probably isprobably is
Research: BBB online, Atty. Gen Research: BBB online, Atty. Gen Office, ask a friend who invested…Office, ask a friend who invested…google is probably the LEAST google is probably the LEAST reliable way to research a scamreliable way to research a scam