Economics 101

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ECONOMICS

Understanding Economics

What is Economics

Economics is the social science that studies economic activity to gain an understanding of the processes that govern the:

Production

Distribution consumption of goods services in an economy.

Economics deals primarily with the concept of:

Scarcity

What is scarcity?

Scarcity is the fundamental economic problem of having

– unlimited human wants in a world of limited resources.

Explain the picture in your own words

Market Economy

What is a market economy?

A market economy is an economy in which decisions regarding investment, production and distribution are based on

Supply demand

Main purpose of a market economy would be:

Encourage political and economic cooperation between member nations

Market Economy

Market Economy

Market economies are guided by the idea that they are:

Governed by self interest

Set prices

If more people want a product – the price goes up and companies make less

If less people want a product – the price goes down and companies make more

Deficit Spending

What is deficit spending?

The act in which the federal government spends more than it receives

Deficit spending is normal in times of economic slowdowns

Job:

Pumps money into the economy to:

Stimulate activity and job growth

Deficit Spending

Purchasing power will increase and economic growth will be stimulated

The overall amount of money that the U.S. owes to its creditors is

Deficit spending

Deficit Spending

Some issues that

Governments face with deficit:

Hard to reduce the size of a deficit

The larger the budget deficit – the greater the national debt

Deficit occurs when the government spends more than it receives

Economic Depression

What are the causes of

Economic Depression?

High unemployment

– overproduction

Business Cycle

Business cycle:

The fluctuations in economic activity that an economy experiences over a period of time.

A business cycle is basically defined in terms of periods of expansion or recession.

Business Cycle

Business cycles purpose are for governments to look at:

Irregular fluctuations in economic activity

Government Spending

People disagree with the laws of deficit spending

Do you support /not support the idea of government intervention to help stimulate the economy?

Activity

Work with a partner to track the nations deficit and debt over a period of 10 years

Write a brief explanation on your findings

Draw a detailed graph or chart of the information you found

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