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Economics. SPI. 7.2.1 Recognize basic economic concepts (i.e., imports, exports, barter system, tariffs, closed and emerging markets, supply and demand, inflation, recession, depression). Learning Goal.
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SPI • 7.2.1 Recognize basic economic concepts (i.e., imports, exports, barter system, tariffs, closed and emerging markets, supply and demand, inflation, recession, depression)
Learning Goal • By the end of this unit, you will understand and be able to compare and contrast the different types of economies and explain how they are interrelated.
Thinker?! • QUICK! Don’t Talk! • What is your favorite car? • (Keep in your head!!)
What does this picture say to you?
The Oil Shortage of 1979 was caused by an embargo of oil by other countries because the US sold weapons to Israel. • As supply dropped, gas rose from 30¢ to 80¢ per gallon. This caused stations to limit gas sales.
What does an oil shortage almost 30 years ago have to do with me?
It’s ECONOMY! • The economy of each country is vital to its citizens survival. It allows us to buy food, have shelter, and get healthcare. • The Oil Shortage greatly affected our economy in the late 70s.
What is Economics? • Economics is the system that a nation uses to organize the production and distribution of goods and services that a nation’s citizens want and need.
What affect did it have? • Remember your dream car? How many of you picked a large SUV or truck? Well… • Many Americans at this time owned large “gas guzzlers” and they started to buy smaller, compact cars (usually foreign) to save on gas.
Econ Basics • Terms to know… • Consumer: Someone who buys or uses a product • Supply: The amount of an item or substance available to the consumer. • Demand: How much something is wanted/needed by the consumer. • Inflation: The rise in prices when money loses its buying power.
Econ Terms Gross National Product Gross Domestic Product Also known as GDP The value of all goods and services produced WITHIN the country. • Also known as GNP • The value of all goods and services that a country produces in one year within or outside of the country.
EconomicSystems • Free Enterprise: Economic system where people, NOT THE GOVERNMENT, decide what to make, sell, or buy. • Command Economy: The GOVERNMENT owns most of the industries and makes most of the economic decisions. (Communist Countries) • Barter: Here people trade items or services for what they need. For example, a baker needs a haircut, so he trades 5 loaves of bread to the barber in exchange for the haircut.
Factors of Production • Factors of Production are the things that determine what goods are produced in an economy. • Natural Resources: What does an area have to use? • Money: What funds are available to pay for production and the labor needed for that production?
Where does it come from? • Bananas • Coffee • Chocolate • Olives • Spices
Now you know! • Bananas: India • Coffee: Brazil • Cocoa (in chocolate): Western Africa • Olives: Spain • Spices: India, Asia
What is Trade? Imports Exports Goods manufactured in a country that are sold around the world to other countries. • Goods that come into a country but were made in another country.
Tariff • A tariff is a tax on imported goods. This makes foreign goods more expensive. It is to encourage people to buy goods manufactured in their home country and protect local businesses.
Foreign Trade • Closed Markets are countries that are not allowed to trade with certain other countries. For example, we do not trade with Cuba. Do you know why?
The Trade Embargo with Cuba • When Cuba became a Communist government, the United States refused to trade with them. Neither country trusts the other, so trade has never resumed between the two.
Developing vs. Developed Developed Developing Developing countries, or EMERGING MARKETS are countries experiencing rapid growth and industrialization. • These countries already have industries and established markets.
Take a look! • The garment industry refers to the manufacture of the clothes we wear. Clothing items make up a large part of imports into the United States. • Why do we import so many clothing items?
Well….. • The minimum wage in the US is $7.25 per hour. • The minimum wage in India is 51¢ per hour. • Someone in the US makes a t-shirt; Someone in India makes a t-shirt. • Which one costs the most? • Which one would you buy?
For your consideration… • Should we encourage foreign trade to help developing countries, or should we buy only U.S. made goods to support local jobs? • What would happen if we didn’t import clothing?
The Bad Times Recession Depression A more severe downturn: GNP drops more than 10%. A depression usually lasts longer. • A drop in the GNP, or economic activity, of 10% or less.
The Great Depression • The Great Depression began on Black Tuesday, October 29 of 1929. • Prior to this, the 1920s, or the Roaring 20s, had been a time of great prosperity following the hard times of WWI.
The Great Depression • Many people during this decade had money they saved in banks. The banks then invested this money in stocks on Wall Street. • When the stock market crashed, all the money the banks had invested was lost. • Who did the money belong to?
The Great Depression • There are many factors that caused the Great Depression, but the result was people lost their jobs, their life-savings, and struggled to survive. • Some causes were more supply than demandand misuse of credit.
Dust Bowl • As if the Great Depression wasn’t enough, in the early 1930s, the central plains of the US suffered severe droughts which caused dust storms. • The land had been stripped of the grasses that kept the fine soil in place and held the water in during times of drought. • People left this part of the country in large droves looking for work in other parts of the country.
Dust Bowl • Many of these people were called “Okies” because they came from Oklahoma.
