Upload
ethelbert-moore
View
213
Download
1
Embed Size (px)
Citation preview
ECONOMIC SYSTEM
COMPONENTS
Private Ownership
Control of productive resources• land• labor• capital
• that are used to produce goods and services
Supply and Demand
Consumers are the demand
Producers are the supply
• When demand is high prices go up• When production is higher than
demand prices go down
Profit Motive
Desire to make money for goods and services consumers want.
Most powerful force that drives our economy
Competition
Have to offer the best product or service for the lowest price.
Requires efficient management of productive resources
Free Economic Choice
Individuals & businesses have the right to make choices about• spending• earning• saving• investing• producing
Government Involvement
Regulates taxes, spending and monetary policies
Gross Domestic Product
The most frequently used method for measuring economic performance
Current value of all goods and services produced in a country in a year
GDP
Consumer Price Index
A common method for measuring inflation
Measures monthly changes in the price of about 400 goods and services that people buy regularly
LAW OF SCARCITY
All economic systems are based on the fact that resources are limited while needs and wants are unlimited !
Applies to:
Individuals Businesses Government
ANTI-TRUST LAWS
Prevents• monopolies
• restraints of trade
MONOPOLY
A single company controls the entire supply of a product or service
PROGRESSIVE TAX
0
20
40
60
80
100
1st
Qtr
3rd
Qtr
East
West
North
Income Tax is an example
People with the higher incomes pay the higher tax