Economics 101

1
Economics 101

• What is an economy???
• economy - Activities related to the production
  and distribution of goods and services in a
  particular geographic region .

2
Economic Systems

• An economic system is
• -the way government and businesses work together
  to provide goods and services to consumers

3
3 Economic Questions

• 1. What goods services should be produced?
• 2. How should these good and services be
  produced?
• For whom should these goods and services be
  produced?

4
Pure Command Economy

• Government controls decision making
• Government owns businesses
• Government decides answers to 3 economic
  questions
• Examples North Korea, Cuba

5
Market Economy

• Consumers decide what will be produced
• Marketplace decides answers to 3 economic
  questions
• Based on principles of supply/demand
• Example USA

6
Mixed Economy

• Includes aspects of all economies
• Government and private individuals control
  marketplace
• Example Canada

7
The Business Cycle
8
Stages of the Business Cycle

• Expansion Time when the economy of a country is
  thriving. Businesses are expanding and hiring
  more employees, and selling more
  products/services.
• Peak The point at which sales begin to decline.
  
• Recession A time when the level of economic
  activity begins to decline.
• Trough Sales begin to increase due to low
  prices. Some investors buy share in a company
  guessing the value will begin to increase.

9
Recession vs. Depression

• Recession A significant decline in activity
  across the economy typically lasting for a period
  of 6 months or more
• Depression Sustained, long-term downturn in an
  economy

10
Activity

• http//money.howstuffworks.com/recession.htm
• Read through tutorial and take quiz at the end to
  test your knowledge!