Global EconomicsGlobal EconomicsThis lesson made possible with the help of

investopedia.com

ObjectivesObjectives

• Review economic systems.

• Introduce key economic terms related to globalization.

Warm Up & ReviewWarm Up & Review

• What is economy?– Way in which we

manage resources to meet needs

• What are resources?– Human: time, $, skill– Country: natural

resources, capital, labor force and technology

• Limited resources = Scarcity

Basic Economic SystemsBasic Economic Systems

• 3 Basic Questions?– What to produce?– How to produce?– For whom to produce?

• 3 Systems?• Market

– Free choice, competition• Command

– Govt decides, controls• Traditional

– Cultural needs, subsistence

• Economics – Study of decision-

making & resource allocation.

– Help nations & ppl make informed decisions

The Law of Supply & DemandThe Law of Supply & Demand

• Supply– The amt of a certain good

or service producers are willing to supply when receiving a certain price

– Law of Supply: The higher the price, the higher the quantity produced

•

• Demand– How much (quantity) of a

product or service people are willing to buy at a certain price

– Law of Demand: The higher the price, the less demanded

What’s This Mean?What’s This Mean?

• Desire equilibrium: At the given price, suppliers sell all the goods they’ve produced & consumers get all the goods they’re demanding. – Too much supply, not enough demand = prices drop– Too much demand & not enough supply = prices rise– “Market fluctuations”

Global EconomyGlobal Economy

• Goal is effective resource mgmt for most efficient production

• Weigh opportunity cost– Value of alternative

that must be forgone to pursue certain action

• Specialization & Comparative Advantage– Nation makes certain

products at lower cost (higher quality) than others

Globalization ReviewGlobalization Review

• What is globalization?– Growing integration of

the world’s economies and societies.

– Open country to free trade

– Open currency markets

– Privatize business

Global ImpactGlobal Impact

• As global economy becomes more interdependent– Dvpt depends on wise

use of globally scarce resources

– Decisions in one location affect all others

ActivityActivity

• Illustrated Global Economic Terms– Match up the word from the list of key terms

provided with the image that represents its concept.

ClosureClosure

• What factors drive global economic decision making?

– Resource Scarcity– Supply & Demand– Opportunity Cost– Comparative

Advantage

HomeworkHomework

• Choices Reading – International Trade: Competition & Cooperation in a Globalized World

• Available in classroom