Monday, March 6, 2017

Study Guide Chapters 1-18

Final Study Guide: 
Use this study guide as a tool to study and take notes as you read your Economics text book. As a bonus for having completed the study guide you can earn points towards your final. A completed handwritten study guide can be turned in on the day of the final for 10 extra points. 

Directions: Print your study guide and begin completing it with important details from the chapter. 

Final Study Guide Prentice Hall 

CHAPTERS 1 – 18 (Prentice Hall text)

Chapter 1 – What is Economics
Section 1
Define economics.
Explain why scarcity and choice are basic problems of economics.
Describe the three factors of production and the two types of capital.
Section 2
Explain the relationship between trade-offs and opportunity costs.
Describe the different types of economic products.
Section 3
Explain the information provided by a production possibility curve and the factors that affect it.

Chapter 2 – Economic Systems
Section 1
Identify the three key economic questions.
Describe the characteristics, advantages, and disadvantages of the traditional, command, and market economies.
Section 2
Explain why markets exist.
Explain the circular flow of economic activity.
Identify the advantages of a free market economy.
Section 3
Describe how a centrally planned economy is organized.
Identify the problems of a centrally planned economy.
Section 4
Explain the rise of mixed economic systems.

Chapter 3 – American Free Enterprise
Section 1
Describe the tradition of free enterprise in the U.S. and the constitutional protections that underlie it.
Explain the basic principles of the U.S. free enterprise system.
Describe the role of the consumer and government in a free enterprise system
Section 2
Explain how the government tracks and seeks to influence business cycles.
Section 3
Identify examples of public goods.
Explain how the government allocates some resources by managing externalities.
Section 4
Summarize the U.S. political debate on ways to fight poverty.
Describe the main programs through which the government redistributes income.

Chapter 4 – Demand
Section 1
Explain the law of demand.
Understand how the substitution effect and the income effect influence decisions.
Section 2
Explain the difference between a change in quantity demanded and a shift in the demand curve.
Explain the causes of a change in quantity demanded.
Explain the factors that could cause a shift in the demand curve.
Section 3
Explain the concept of demand elasticity and how to calculate it.
Identify when demand curves are elastic and inelastic.
Identify factors that affect elasticity.

Chapter 5 – Supply
Section 1
Explain the law of supply.
Interpret a supply graph.
Explain the relationship between elasticity of supply and time.
Section 2
Explain how firms decide how much labor to hire to produce to a certain level of ouput.
Identify the types of production costs.
Section 3
Explain factors that can create changes in supply.
Identify three ways that the government can influence the supply of a good.

Chapter 6 – Prices
Section 1
Explain how supply and demand create balance in the marketplace.
Describe price ceilings and price floors and explain their effects.
Section 2
Identify the determinants that create changes in price.
Describe how a market reacts to a fall in supply or a shift in demand.
Section 3
Explain the advantages of using prices as a way to allocate economic products.
Explain problems that arise with a command economy, such as rationing, shortages, and black market.

Chapter 7 – Market Structures
Section 1
Explain the four conditions of perfect competition.
List two common barriers that prevent firms from entering a market.
Section 2
Explain monopolies and how they are formed, including government monopolies.
Section 3
Describe characteristics and give examples of monopolistic competition.
Explain how firms compete without lowering prices.
Describe the characteristics and give examples of oligopoly.
Section 4
Summarize three market practices that the government regulates or bans to protect competition.
Define deregulation and list its effects on several industries.

Chapter 8 – Business Organizations
Section 1
Describe the characteristics, advantages, and disadvantages of the sole proprietorship.
Section 2
Explain the different types of partnerships.
Describe the advantages and disadvantages of partnerships.
Section 3
Describe the characteristics, advantages, and disadvantages of corporations.
Identify types of corporate combinations.
Section 4
Explain how a business franchise works.
Identify different types of cooperative organizations.
Summarize the purpose of nonprofit organizations and the different types.

Chapter 9 –Labor
Section 1
Describe how trends in the labor force are tracked.
Section 2
Explain the relationship between supply and demand in the labor market.
Identify the relationship between wages and skill level.
Explain reasons for the discrepancy in pay between men and women.
Describe factors that affect wage levels.
Section 3
Describe the purpose of labor unions.
Explain why union membership has declined.
Describe several ways to resolve labor and management differences.

Chapter 10 – Money and Banking
Section 1
Explain the three uses of money.
Describe the six characteristics of money.
Explain the sources of money’s value.
Section 2
Explain the purpose of the Federal Reserve System.
Describe the protection offered by the FDIC.
Note: American leaders in the early United States wanted to establish a stable banking system in order to promote international trade and economic growth.
Section 3
Explain the functions of financial institutions.
Identify the different types of financial institutions.
Chapter 11 – Financial Markets
Section 1
Explain how investing contributes to the free enterprise system.
Explain how the financial system works to transfer funds from savers to borrowers.
Describe the role of various nonbank financial intermediaries.
Identify the trade-offs among risk, liquidity, and return.
Section 2
Identify three components of bonds.
Identify different types of bonds.
Identify the types of major financial assets and their characteristics.
Section 3
Explain the benefits and risks of buying stockes.
Describe how stocks are traded.
Explain how stock performance is measured.

Chapter 12 – Gross Domestic Product and Growth
Section 1
Explain how Gross Domestic Product (GDP) is measured.
Identify the main limitations of GDP
Section 2
Explain the phases of a business cycle.
Identify four key factors that keep the business cycle going.
Section 2
Explain how unemployment is measured.
Describe five types of unemployment.
Section 3
Describe how economists measure the growth of the U.S. economy.
Identify factors that influence economic growth.

Chapter 13 – Economic Challenges
Section 1
Describe the different types of unemployment.
Describe how full employment is measured.
Section 2
Explain the effects of rising prices.
Explain the use of price indexes to compare changes in prices over time.
Identify the causes and effects of inflation.
Section 3
Define who is poor according to government standards.
Describe reasons for income inequality and poverty.

Chapter 14 –Taxes and Government Spending
Section 1
Describe types of tax bases and tax structures.
Explain the economic impact of taxes.
Identify the characteristics of a good tax.
Identify who bears the burden of a tax.
Section 2
Describe the process of paying individual income taxes.
Identify typical items that can be claimed as a tax deduction, such as home mortgage interest, charitable donations, and some medical expenses.
Describe other types of taxes.
Section 3
Explain the difference between mandatory spending and discretionary spending.
Describe major entitlement programs.
Identify categories of discretionary spending.
Section 4
Explain where state taxes are spent.
Identify major sources of state revenue.
Summarize local government spending and revenue.

Chapter 15 – Fiscal Policy
Section 1
Describe how the government uses fiscal policty as a tool for achieving economic goals.
Describe the impact of fiscal policy decisions on the economy.
Section 2
Summarize the basic principles of classical, Keynesian, and supply-side economics.
Section 3
Explain the importance of balancing the budget.
Explain how the federal deficit is related to the federal debt.
Explain the impact of the federal debt on the economy.

Chapter 16 – The Federal Reserve and Monetary Policy
Section 1
Describe the structure of the Federal Reserve System.
Section 2
Explain the roles of the Federal Reserve System.
Section 3
Describe the process of money creation.
Explain tools of monetary policy.
Section 4
Explain the difference between an easy money policy and a tight money policy, and the conditions for which each is used.

Chapter 17 – International Trade
Section 1
Explain the advantage of international trade.
Section 2
Identify different types of trade barriers and their effects.
Summarize arguments in favor of protectionism.
Section 3
Explain how changes in exchange rates of world currencies affect international trade.

Chapter 18 – Economic Development and Transition
Section 1
Describe what is meant by developed nations and less developed countries.
Section 2
Identify causes and effects of rapid population growth.
Identify the importance of human capital to development.
Identify “brain drain”.
Section 3
Identify sources of funds for economic development.
Section 4
Identify steps in moving from a centrally planned economy toward a free market economy.

8.4 Government Regulatory Agencies

Federal Regulatory Agencies:


Image result for faa gold seal image


The government has created a number of federal regulatory agencies to oversee the economy. The government's involvement in our economy has created a modified free enterprise system. The agencies are intended to protect and regulate industries and consumers. Some of the agencies you maybe familiar with are:

  • FDA - Food and Drug Administration
  • NLRB- National Labor Relations Board
  • EPA - Environmental Protection Agency
  • FAA -  Federal Aviation Administration
  • FDIC -Federal Deposit Insurance Corporation
Directions: Watch the following video: FDIC   and visit the following website: FDA and answer the following questions. Post your answers.

1. If you open a savings account in a bank that indicates deposits are FDIC insured, what protection does that give you?

2. If you purchase uncooked meat at the grocery store what government agency will oversee monitor the quality and safe handling of the product?

3. Which Agency oversees the safety and procedures of the airline industry?

4. Select a Federal Agency that interests you. Tell us about the agency include the name, the purpose, and how the agency benefits American society.

8.2 Anti-Trust Legislation

 Anti-Trust Legislation

Directions: Review document below. Watch at least one of the two links. Answer the questions. Post your answers. 

Sherman Anti-Trust Act (1890)

 Chapter 7 Section 3

The government can encourage competition and regulate monopolies in order protect the public welfare. This power was established in the late 1800's when a law was passed to prevent monopolies, combinations and trusts. The law was the Sherman Antitrust Act of 1890. It outlawed all contracts in restraint of trade in order to slow the growth of trusts and monopolies. The Act was intended to maintain competition. However, more specific laws were needed to stop practices that interfered with trade between the states. The government created four anti-monopoly legislative acts known as:1890 Sherman Antitrust Act, 1914 Clayton Antitrust Act, 1914 Federal Trade Commission Act and the 1936 Robinson Patman Act. The over arching goal of the legislation is to prevent market failures due to inadequate competition and restrictions on trade between the states. 

The Sherman Anti-Trust

Directions: Watch one or both of the above posted videos which describes the Sherman Anti Trust Act and answer the following questions. Post your answers.
1. Define the following terms trust and monopoly.
2. Describe the Sherman Anti Trust Act noting when, where and what it was about.
3. What was the chief effect of the  Sherman Antitrust Act?

8.1 Self Interest and Competition in the Economy

Current News and the Economy
Image result for current economic news image

The term laissez-faire originated with a group of eighteenth century French economists who supported free trade. Their slogan, laissez fiare, laissez passer ("let us alone, let us have free circulation of goods") was adopted by Adam Smith to describe the idea of no government interference in the economy. (Glencoe TE Econ Principles and Practices p. 164) Recall what has been covered on our discussion board regarding competition and self interest. 

Directions: This week monitor newspapers, current events, and magazines to find stories related to  competition or self interest in the economy. Find one article and.......

  • write a summary of the article
  • note the publication from which the article came from 
  • explain how the article relates your economic assignments
  • post your summary
  • comment on another student's summary

Month 7.4 Market Structures - Self Interest

Chapter 7 Market Structures

Adam Smith on Self-Interest (Document A)

Adam Smith was a Scottish professor that strongly believed in the idea of a free economy. His ideas were the foundation of Capitalism.  In this passage  from his book The Wealth of Nations, Adam Smith discusses his law of self-interest, which is the idea that people work for their own good.     

“The natural desire of every individual is to improve his own condition (life).  
For example, it is not because of the benevolence (kindness) of the butcher, the brewer, or the baker that we expect our dinner, but from their regard for their own self-interest
It is for his own benefit, and not that of the society, that the butcher is thinking about when he slaughters his pigs for meat. His self-interest leads him to choose that employment (job) which is also helpful to society, but he intends (desires) only his own gain. If people were not willing to pay the butcher good money for his meat, then the butcher would not care to slaughter his pigs.”

Guiding Questions
  1. Analyze: What does Smith mean when he says “the natural desire of every individual is to improve his own condition”? Explain.

  1.  Summarize. Why does Adam Smith believe the butcher does his job (EXPLAIN! Don’t just say “self-interest!”)?

  1. Interpret: Do you agree with Adam Smith that people do their jobs only out of self-interest? Are there any jobs that people might do for a different reason? Explain. 

Month 7.3- Market Structure - Competition

Chapter 7 Market Structures

The term laissez-faire originated with a group of eighteenth century French economists who supported free trade. Their slogan, laissez fiare, laissez passer ("let us alone, let us have free circulation of goods") was adopted by Adam Smith to describe the idea of no government interference in the economy. (Glencoe TE Econ Principles and Practices p. 164)

Directions: Learn more about Adam Smith and his ideas about the economy by watching the videos below. Read the following historical writings of Adam Smith in the document below. Analyze the document. Answer the questions. Post your answers.

Adam Smith on Competition (Document B)

Adam Smith was a Scottish professor that strongly believed in the idea of a free economy. His ideas were the foundation of Capitalism.  In this passage  from his book The Wealth of Nations, Adam Smith discusses his law of competition, which is the idea that competition forces people to make a better product

“If any trade, item, or object is beneficial (helpful) to the public, free and more general (widespread) competition will always make it more so (beneficial). It is a characteristic of man that no item or object is produced to his liking. He finds that there is need for improvement in everything.
The whole industry of human life is not employed (used) to obtain the supply of our three most basic needs, which are food, clothes and lodging (housing). The industry of mankind is employed to obtain the luxuries (nice things) of life according to the nicety and delicacy of our tastes (the styles people like).”

Guiding Questions
  1. Analyze: According to Adam Smith, why is competition a good thing? Explain.

  1.  Summarize: Please read the second paragraph. What is the main point of this paragraph? Put it in your own words

3.     Interpret: Do you think it is a good thing that the “industry of mankind” is not being used to supply our basic needs, but to  supply “the luxuries of life?” Why or why not?

Monday, February 27, 2017

Month 7.2 Price Adjustment

Price Adjustment: Glencoe Economics Chapter 6    

surplus is a situation in which the quantity supplied is greater than the quantity demanded at a given price. Therefore, the price tends to go down as a result of the surplus.  On the other hand, a shortage is a situation in which the quantity demanded is greater than the quantity supplied at a given price. As a result, both the price and the quantity supplied will go up in the next trading period.

Directions: To further explain the Supply and Demand, watch the following lesson and answer the questions below. Post your answers.
Demand and Supply Price Adjustment


Questions: Recall a recent visit to an area shopping mall or online vendor and look for examples of surpluses and shortages. List 5 to 10 items for each concept. Note that almost any sale or clearance item can be an example of a surplus, while rain checks or sold-out items signal a shortage. Post your list of surplus and shortage items.Also write a brief paragraph in which you hypothesize as to why the surplus or shortage occurred.