Economic Basics
The main problem in economics is what?
Scarcity.
What type of economies are most common today?
Mixed economies.
Without money, people can instead exchange goods for goods. This is known as what?
Bartering.
What is globalization?
The process in which countries are increasingly linked to each other through trade and culture.
True or False: Mr. Hallman's brother recently got married.
True.
What is an economy?
A system of producing, selling, and buying goods and services.
These economies depend on individuals producing everything themselves. The main goal is survival.
Traditional Economy.
Money is a unit of account. What does this mean?
It's a measurement of economic value. We place value on things based on how much money they are worth (ex: TV that cost $100 compared to a tv that cost $500, we can compare the economic value of different items with money).
What are the two main things that have allowed globalization to occur so rapidly?
Communication & transportation.
What was Mr. Hallman major in college?
History.
Mr. Hallman can either spend time with his wife or go play basketball. Because Mr. Hallman is the next Kobe Bryant, he chooses to go and play basketball. What is the opportunity cost of playing basketball?
Spending time with his wife.
This type of economy involves businesses and individuals buying and selling goods and services at their own free will. They can make their own choices about how they want to spend their money and what careers they want to choose.
Market Economy.
Explain what an interest rate is.
The % a bank charges on a loan or the % you get paid for keeping your money at the bank (ex: savings account).
What are trade barriers? Why do they encourage citizens to purchase goods made within their own country rather than buying them from another country?
True or False: Mr. Hallman pulled the fire alarm in 3rd grade.
False, 1st grade.
False, the law of supply states that businesses will sell more of a product at a higher price.
This type of economy is closest to the command model in which the government controls the factors of production instead of businesses.
Communist Economies.
Provide one example of a risky investment and one example of a safe investment. Explain why each example is either safe or risky.
Risky - stocks (can lose money easily)
Savings account (your money is safe and secure).
The reliance of one country on the goods, services, and resources of another country. Ex: a country that cannot produce cotton t-shirts relies on another country to export them cotton).
True or False: Mr. Hallman's favorite snack is goldfish.
False, Hersheys.
What are the four factors of production? Explain each of them.
Natural resources - raw materials and land
Labor - people doing work
Entrepreneurship - CEO's & stock investors with liability
Capital - items used to make goods (machines)
Explain what GDP is and whether we would expect a developed country to have a high or low GDP.
GDP is the value of all goods and services produced by a country within one year (annually). We would expect a developer country to have a high GDP because developed countries tend to have better technology, education, healthcare, etc, therefore they are able to buy/sell more (they are better off than developing countries).
Mr. Hallman takes out a loan of $10,000 at a bank that charges 7% interest on the loan. How much will Mr. Hallman have to pay back in interest?
$700 (7% of 10,000 is 700).
Automakers in Europe using products purchased from the United States and Japan is an example of what?
Economic Interdependence.
Two Truths and a Lie: Mr. Hallman's dad was a chemical engineer, Mr. Hallman's mom is a nurse, Mr. Hallman's brother is a doctor.
Mr. Hallman's brother is a doctor.