understanding the global economy
DESCRIPTION
TRANSCRIPT
Understanding the Global Economy
How can I make good decisions?How am I influenced?
How can I be successful?
Study of how to meet unlimited competing
wants with limited resources
Economics
Think, Share
We all compete for resources
What are some competing wants in your family? Ex. Your sisters wants to buy a ______, but you want to buy a ______.
List 2 competing wants in our country?
Marketing Basics - How can I satisfy customers?
4
Products:Economic wants that you can buy
Goods
Tangible products, ex. Sports equipment
Services
Intangible products, ex. Live concert , movie
Think, pair, share
What are some things you want, but you can’t go to a store to buy?
Capital Money, buildings,
equipment, infrastructure – everything needed to start & operate a business
Labor All who work full or part
time, public or privateNatural/Land Land, coal, oil, trees,
water
ResourcesAll the things used in producing goods, services, buildings, ideas
Land, Labor or Capital Resource?
Land, Labor or Capital Resource?
Land, Labor or Capital Resource?
Difference between wants/needs and available resources
**key – makes us dependent upon each other globally
Scarcity
Think, Pair, Share
What percent of the world’s consumer’s DO YOU THINK live in the US?
Imports Goods and services purchased from other
countriesExports Goods and services sold to other countriesdeficit More imports than exportssurplus More exports than imports
Balance (of trade)The difference in value between exports and imports of a nation
Think, pair, share:
Does the US have more imports or exports?Does the US have a surplus or a deficit?
World Importswhat’s going on in this picture?
Prosperity Good time to start a new business, prices rise, economy is
flourishing (90’s)Recession Slow down for at least 6 months, companies reduce
workforce, prices are loweredDepression Long recession, hard to find a job, many businesses close,
very low pricesRecovery Business spikes up, people find jobs, demand for products
increases, prices increase
Business CycleStages an economy goes through due to recurring slow down and growth
example
EXAMPLE of the business cycle
Taxes Raise to gain money for govt, lower to give money to
citizens
Interest rate Raise to gain money for businesses, lower to gain
money for citizens
Social service programs Provide programs for economic stability for all citizens Ex. Welfare, food stamps, unemployment and job
services
Government Controlsattempts to control the economy by policy changes
Example of how it works…Gov’t lowers
taxes
People have more money to spend
People buy more things
Company’s make more money
Company’s hire more employees
or give raises
3 questions:what will be produced how will it be producedwho will receive it
Economic systemsHow gov’t answers the following questions determines their economic policy
Market economy/capitalism People answer – private
ownership, marketplace competition
Planned economy/communism
Gov’t answers – gov’t ownership, no competition
Mix economy/socialism Mix – almost all economies are
a mix
Types of Economic Systems:
Risks Potential for business loss or failure
Freedoms
Free Enterprise SystemEncourages individuals to start & operate their own businesses w/out gov’t
Think, Pair, Share
What percent of new businesses fail during their 1st year?
What is the #1 reason businesses fail?
ChoiceOwnershipProfitCompetition
Free Enterprise SystemFreedoms:
Where to work
what to buy
from whom
vote for govt leaders
Free Enterprise SystemFreedoms: Choice
Ownership Own your own
business and land
Free Enterprise SystemFreedoms: Ownership
Profit Money earned after all costs and expenses have been
paid
Owners get to keep this (rather than give to govt) incentive to take the risk of running the business
(still pay taxes though)
revenue Gross income from sales BEFORE costs and expensesexpenditures Costs, expenses and taxes incurred on a business in
order to operate
Free Enterprise SystemFreedoms: Profit
The profit incentive
Competition Struggle for customers between companies
Benefits of: Keeps prices low, more choices, better
quality, incentive to operate efficiently
Free Enterprise SystemFreedoms: Competition
Price Focuses on priceNon-price Focus other than price, ex. Customer service,
quality, gift wrap, location
Free Enterprise SystemFreedoms: Competition
Pure Infinite amount of competitors (like internet)
supply Businesses ability and willingness to sell products
demand Consumers ability and willingness to buy products
Equilibrium point When demand equals supply
Free Enterprise SystemFreedoms: Competition
Surplus/buyers mktMore supply than demand
– keeps prices low Ex. Corn/cornsyrup,
homes
Shortage/sellers mktMore demand than supply
– keeps prices high
Ex. Gas, hybrid cars
Surplus vs. Shortage
Surplus vs. Shortage
Monopoly One firm controls market for a give product
(local phone & cable companies)
Free Enterprise SystemFreedoms: Competition
Direct
Indirect
Free Enterprise SystemFreedoms: Competition
vs.
vs.
Direct or Indirect Competition?
vs.
Direct or Indirect Competition?
vs.
Direct or Indirect Competition?
vs.
Direct or Indirect Competition?
vs.
Direct or Indirect Competition?
vs.
Direct or Indirect Competition?
vs.
Explain economics Explain how the phases in a business cycle
effect SER industries Explain the concept of supply & demand Explain competition as it relates to SER
industries
Understanding the Economy