Journal
• Many people suggest that in order to
preserve our natural resources, rationing
should be reintroduced. For example:
each person would be allowed 10 gallons
of gasoline per week. What are the pros
and cons of such an extreme ration?
• 3 Sentences and date
Chapter 20
Section 1
Global Demand for Resources
I. Global
Population
Issue
A. In 1800s people felt that population
would grow faster than the ability of
the earth to feed people
1. Creating poverty in large cities
B. Wrong?
1. Increased productivity
2. Fewer children
II. Nonrenewable
A. Cannot be replenished once they
Energy Resources
are used
1. Oil- was so inexpensive, now very
dependent on oil
2. Natural Gas- 25% of energy
consumption
3. Coal- last only about 200 years
4. Nuclear Energy- expensive, toxic waste,
fail?
III. Renewable
A. Can be replenished
Energy Resources
1. Hydroelectric Power- water (dams,
waterfalls)
2. Biomass- energy from wood, straw,
corn, landfill gasses, fish oils & other
wastes (Ethanol)
3. Solar- sun power
4. Wind Power- California, Texas,
Minnesota, Vermont, Hawaii & Iowa
International Economics
I. Trade
A. Nations trade to improve their
standard of living
B. Voluntary exchange of good, both
parties need to benefit from trade
C. Allows nations to specialize in
certain items
D. Nations can go beyond their
production possibilities curve
Comparative Advantage
• Measured in output over a period of time
– Tons per acre, miles per gallon, apples per tree
Or
• Measured by the amount of inputs necessary to
do an activity
– Hours to do a job, number of acres to feed a horse
Chapter 20
Section 2
I. The Price
System
A. Price contributes to whether scarce
resources are conserved
B. Other resources prices soared
during the oil embargo
C. Increase/decrease in input price =
increase/decrease in purchase price
Why might a country choose to regulate the price of energy sources?
II. Pollution &
Economic
Incentives
A. Decrease pollution through
regulations or incentives
B. Other ways include taxing according
to the amount of pollutants they
release
C. EPA supplies permits for certain
pollutants that will become more
scarce and more expensive over
time
Chapter 20
Section 3
I. Framework for
Decision
A. Economic Decision Making
Making
process:
1.
2.
3.
4.
State the problem
Determine the goal to be obtained
Consider alternatives
Choose an economic concept & use
it to evaluate the alternatives
5. Decide which alternative leads to the
achievement of the goal
B. Cost-benefit- compare the
opportunity & monetary
cost/benefits
II. Coping with
the Future
A. Modified free enterprise economy- a
free enterprise economy with some
government involvement
1. Allows buyers & sellers to freely make
the decisions that satisfy their wants &
needs
B. U.S. is now a free-market economy
based on capitalism, yet modified to
satisfy social needs
Imbalance of Payments
• Balance of Payments- record of foreign transactions
• Accounts:
– Current- goods, services, income and current transfers are
recorded
– Capital- physical assets such as a building or a factory are
recorded (also includes financial assets i.e. stocks/bonds!)
– Official Reserves: controlled by the government
• Transaction:
– Debit- transaction uses foreign currency
– Credit- transaction earns foreign currency
Capital or Current item?