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The American Economy Today, you will need notebook paper 

The American Economy Today, you will need notebook paper . Goods: tangible products that satisfy our wants and needs. 4 FACTORS OF PRODUCTION- resources necessary to produce goods and services. Natural resources Labor Capital Entrepreneurs. NATURAL RESOURCES.

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The American Economy Today, you will need notebook paper 

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  1. The American Economy Today, you will need notebook paper 

  2. Goods: tangible products that satisfy our wants and needs. • 4 FACTORS OF PRODUCTION- resources necessary to produce goods and services. • Natural resources • Labor • Capital • Entrepreneurs

  3. NATURAL RESOURCES • Gifts of nature that make production possible. • Fertile farmland • Abundant rainfall • Forests • minerals

  4. LABOR • Nation’s labor/WORK force • A.k.a. human resources • Physical and mental efforts that people contribute to the production of goods and services

  5. CAPITAL Goods • Capital goods! • Tools and machinery and buildings used to make other products • THEY ARE THE RESULT OF PRODUCTION • OR MONEY NEEDED TO DEVELOP GOODS

  6. ENTREPRENEURS • Individuals who start new business, introduce new products and improve management techniques • Willing to take risks • Use f.o.p. to produce new products

  7. THE GDP: GROSS DOMESTIC PRODUCT • WE can measure our economic success by our income and ability to provide for ourselves and our families • The success of the OVERALL economy is measured in a similar way. • MEASURE OF Economy's SIZE IS THE GDP!

  8. Total value in DOLLARS, of all the FINAL goods and services produced in a country during a SINGLE year. FINAL good- ex: loaf of bread sold to you. INTERMEDIATE good- goes into making a loaf of bread: Wheat Sugar Honey…. ARE NOT COUNTED IN GDP! GDP: Gross Domestic Product

  9. GDP is an important way to measure the STANDARD of LIVING • Standard of living- • Quality of life based on the possession of necessities and luxuries that make life easier. • IF GDP grows faster than the population, there are more goods and services for EACH of us to enjoy!

  10. Quantity-GDP does not reflect improvements in the quality of products. DIFFERNECE b/w a $1500 computer purchased today, than a computer costing the same amount a few years ago. FOCUS ON THE QUALITY OF IMPROVMENT! QUANTITY vs. QUALITYGDP measures: QUANTITY

  11. REVIEW: 4 FACTORS OF PRODUCTION: 1. natural resources 2. labor • Physical and mental 3. Capital 4. Entrepreneurs GDP based on __________? QUANTITY

  12. Section 2: Economic Activity and Productivity • GET A BOOK… look @ • Circular Flow Model: pg 429 • The flow of resources, goods and services and $$ in a market system is CIRCULAR! • Called a circular flow diagram.

  13. Circular Flow: WHY IS IT CIRCULAR? 1. Consumers earn income in FACTOR MARKET: the market where productive resources are bought and sold. • Here we earn salaries in exchange for labor. • People who own land can loan it out: RENT! • People who own capital exchange it for interest 2. When those people get their income, they spend it inthePRODUCT MARKET: the market where producers offer goods and services for sale.

  14. Government Sector: • Made up of all 3 levels of government: • Federal • State • local. • It also can produce goods and services (ntl.defense, education, housing, transportation) • Public universities charge tuition, hospitals charge fees, buses charge fares.

  15. Foreign Sector • Represents all the countries in the world • Arrow at both ends b/c we SELL products to and BUY products from other countries. _________________________________ Define the following: pgs 430-432. (7 minutes) Productivity, specialization, division of labor, human capital and economic interdependence.

  16. Section 3: Capitalism and Free Enterprise • Capitalism- where WE own most, if not all means of production • Free enterprise- businesses can compete for profit with LITTLE gov’t inference

  17. 3 Terms used to describe the AMERICAN economy:

  18. CONSUMER SOVEREIGNTY • WE ARE IMPORTANT B/C BUSINESS WANT TO TRY TO PRODUCE THE PRODUCTS THAT WE WANT • CONSUMER IS KING or ruler of the market. • ANOTHER FEATURE OF CAPITALISM: • Private property rights-freedom to own and use or dispose of own property as we choose • Competition- struggle b/w buyers and sellers to get best products at the LOWEST prices

  19. SPREAD OF CAPITALISM • Grew from medieval and early Europe. 1. People should work for economic gain 2. Gov’t should have a limited role in economy • ADAM SMITH-Scottish economist and philosopher.

  20. Wealth of Nations (1776) • Described basic principles of economics for the 1st time. • From this we get: • LAISSEZ-FAIRE economics: “to let alone” gov’t should not interfere in marketplace.

  21. Section 4: THE ECONOMY & YOU • CONSUMER BILL OF RIGHTS: • Right to a safe product • Right to be informed • Right to choose • Right to be heard • Right to redress (get $ from manufactures if product causes physical or financial harm)

  22. Goods Services Factors of production 4 factors of production GDP Standard of living Circular flow model Consumer sovereignty Private property rights Competition Productivity Specialization division of labor human capital economic interdependence. QUIZ TOMORROW-

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