ECONOMICS. MARKET ECONOMY Capitalism Based on Supply and Demand No Government Intervention.
Transcript of ECONOMICS. MARKET ECONOMY Capitalism Based on Supply and Demand No Government Intervention.
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ECONOMIC
S
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MARKET ECONOMY
Capitalism
Based on Supply and Demand
No Government Intervention
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LAW OF SUPPLY
Supplier will be willing to offer more goods at a higher price
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LAW OF DEMAND
The higher the price, the less people will demand it
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COMMAND ECONOMY
Government makes all Economic Decisions
Socialism and Communism
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MIXED ECONOMY
United States, has a mixed Economy but, it is more Market then Command
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U.S. ECONOMY
Banking Regulations
Governmental Protection AgenciesEx: E.P.A., F.D.A., etc.
Public Utilities= Legal Monopolies because they are regulated
Government Intervention is needed at times, but not always the best solution
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ENTREPRENEUR
Person who starts a business
Capital, anything used to produce something else
Tools, pizza oven, etc.
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THREE TYPES OF BUSINESS
Sole Proprietor
Partnership
Corporation
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PARTNERSHIP
Business owned by two or more people
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CORPORATION
Owned by stockholders and run by hired help
Where most profits in America are produced
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STOCKS AND BONDS
Stocks = Ownership
Bonds = Loan
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LABOR UNIONS
Formed because employees wanted control over working conditions
Safety, minimum wage, child labor, etc.
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COLLECTIVE BARGAINING
Employee and Employer work together to reach an agreement
Conflict = workers want more money and benefits, employers want more profits.
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FRINGE BENEFITS
Vacation
Sick Leave
Medical Insurance
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STRIKE
Work Stoppage.
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PERSONAL FINANCEFixed Expenses vs. Variable
Expenses
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FIXED EXPENSES
Don’t change as fast-rent, mortgage payment, insurances
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VARIABLE EXPENSES
Can change month to month (leisure) this is what you have the most control over
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TAXES
Money paid to the Governments
Income tax
Sales tax
Property tax
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TAX METHODS
Progressive- More you make higher percentage you pay
Regressive- taxes a larger percentage from lower income people (some believe state sales tax is regressive)
Proportional- some percentage from everyone(flat tax)
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SALES TAX
Can be either regressive or proportional, depends on your point of view
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BANKING
Making loans, most important role
High Debt= High Interest Rate
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BANK ACTIVITY
Depends on Economy
Inflation- rise in prices
Deflation- decrease in prices
Recession- decline in activity
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U.S. CURRENCY
Has value because U.S. Government and the Economics of the world says it does
Not backed by gold or silver
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LOANS
Helps the Economy grow
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FEDERAL RESERVE BANK
Created by Congress in 1913
Regulates money supply by influencing borrowing.
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FEDERAL RESERVE ACTIVITY
Inflation- discourages loans by raising interest rates
Recession- encourages loans by lowering interest rates