notebook12

Government & Economic Students

Participation in Government

12th Grade Economics & Government

P.I.G.

Ch.1
Ch.10
Ch.13
Ch.11
Ch.9
MidTerm
Ch.5
Ch.6
Ch.7.
Ch.24
Ch.25

Economics

Unit 1

Economics



						12th Grade Economics Students Will Understand That � People make choices based on wants, needs, and costs. Scarcity necessitates trade and individual exchange. Resources are managed through economic systems. Productive resources are limited Governments manage economies to meet their goals and maximize the benefit to their citizens. Markets exist to facilitate trade. Markets are most efficient when there is minimal interference. Consumers and producers make all decisions in a free market. Governments intervene in markets to protect the public good. Successful entrepreneurs exemplify the values of a free society. Societies must balance environmental and economic interests. Businesses are integral parts of successful societies. Businesses and consumers both gain from their interactions. Governments regulate business to protect workers, consumers, and businesses. Consumers must balance needs and wants and resources available. Investors should always evaluate risk and reward before making decisions. The government tries to balance consumer responsibilities with business rights. Societies want governments to ensure prosperity. Economies can be affected by institutional interventions. Governments mange the economy for the common good. Individuals have contributed to the field of economics. Societies can trade to improve their quality of life. Groups trade if they perceive benefits. Geography promotes regional exchange of goods and services. Governments use economics as a tool for diplomacy. Economic policies are often based on historical relations. 12th Grade Economics Students Will Know � People exchange voluntarily because of the perceived benefits. Scarcity causes people to make choices about how to allocate their resources. Opportunity cost looks at decisions by analyzing costs and benefits of alternatives. The basic economic question looks at the what, how, and who of economic systems. The four factors of production are natural resources (land), human resources (labor), capital, and management (entrepreneurship). The three types of market systems are traditional, command, and market. Karl Marx is considered the father of socialism and influenced the United States' and other economic systems. Adam Smith is considered the father of capitalism and influenced the United States' and other economic systems. The United States economic system is a mixed system. The pillars of our economic system revolve around private property, profit, and competition. The law of demand tells us people want more when prices go down and want less when prices go up. The law of supply tells us businesses produce more when prices are higher and produce less when prices fall. Market prices tend to be efficient; they minimize shortages and surpluses. When shortages exist, prices will rise and when surpluses exist, prices will fall. Subsidies, price floors, and price ceilings are all forms of market interference, which make markets less efficient. 12th Grade Economics Students Will Be Able To � The elasticity of a good describes how much the quantity demand changes when there is a change in price. Substitute goods and complementary goods both affect markets and the decision consumers make. Supply and demand curves can graphically explain market conditions. The law of diminishing marginal utility helps explain consumer behavior by telling us there comes a point when satisfaction decreases with increased consumption. Marginal analysis is when individuals compare the marginal cost and marginal benefit of a decision before the act upon it. The majority of businesses can be categorized as forms of proprietorships, partnerships, or corporations. Entrepreneurs have many characteristics, but their most valuable trait is that they know when to take a risk. Dr. Deming has influenced American industry and society by emphasizing quality, the customer, and that it is possible to have win-win situations. Variable costs change based upon the amount produced, while fixed costs remain constant regardless of amount produced. Larger businesses experience economies of scale, they buy at discounts and can afford machinery that increases productivity that smaller businesses cannot afford. Diminishing returns occurs when increased inputs do not lead to increased productivity. Labor unions can lead to better working conditions and higher wages through collective bargaining. The Four P's of marketing are price, place, product, and promotion. Markets function differently, and affect consumers differently, depending on whether or not they are monopolies, an oligopolies, monopolistic competition, or competitive markets. Mergers benefit companies; they can be categorized as vertical, horizontal, or conglomerate. The government helps protect business rights through licensing, patents, copyrights, and trademarks. Educated consumers compare similar products before making decisions on purchases. Budgets are tools to help consumers better manage their resources. There are a variety of resources available to help consumers make educated choices, such as Consumer Reports, Better Business Bureau and the state attorney general's office. Consumers can write letters to companies, private organizations, and government agencies when they feel they have been cheated in the marketplace. When investing, consumers need to compare the risk of the investment to the anticipated return. Stocks, mutual funds, commodities, and currency are all items people invest in to gain profits. Banks offer a variety of services that benefit and assist consumers. The three C's of credit are collateral, character, and capacity. Rate of return explains what type of return you are getting on your investment. Insurance, whether medical, life, auto, home or other, is a means of planning for loss. Economists such as Ricardo, Keynes, Friedman, Laffer, and Greenspan have all helped shape economic beliefs and economic policy. Gross Domestic Product is one indicator of the health of our economy by looking at the amount of good purchased. The government's role in the economy is to manage growth while minimizing inflation and unemployment. The government's economic priorities can be seen by analyzing the budget. The circular flow model illustrates the interactions between businesses, consumers, and government. There are three categories of taxes: progressive, proportional, and regressive. Taxes are based on two principles: ability to pay and benefits-received. Banks affect the money supply through their lending practices. The money multiplier helps predict changes in the money supply that result from deposits and loans. The Federal Reserve is the nation's central bank and manages the money supply. Inflation is a period of rising prices and affects consumers as well as producers. Inflation is categorized as either demand-pull or cost-push. Unemployment can be categorized as frictional, structural, seasonal, or cyclical. Fiscal policy is Congress and the President's way of managing the economy through expenditures and taxation. 12th Grade Economic Students Will Know . . . Cont. A comparative advantage is when a country can produce something at a lower opportunity cost than another country. Monetary policy is the Federal Reserves' way of managing the economy through the changes in interest rates, reserve requirements, or open market operations. An absolute advantage is when it takes a country fewer resources to produce something than another country. Governments use trade quotas, embargoes, and tariffs to influence other countries economic and political decisions. NAFTA and the EU are trade arrangements designed to benefit both individuals and countries. A trade deficit is when you import more than you export Exchange rates determine the value at which foreign currency can be traded. The WTO and IMF are examples of international agencies that promote economic prosperity. 12th Grade Economic Students Will Be Able To . . . Interpret what is read by drawing inferences. Detect cause and effect relationships. Recognize author bias. Write reports and research papers Prepare a bibliography. Draw inferences from factual material. Communicate orally and in writing. Interpret graphs Note cause and effect relationships. Predict likely outcomes based on factual information. Read various forms of printed materials. Express personal convictions. Recognize the values implicit in the situation and the issues that flow from them. Recognize propaganda. Detect bias in visual material. Recognize the value dimension of interpretation of factual material is valid. Read for a variety of purposes: critically, analytically, to predict outcomes, to answer questions, to form an opinion, to skim for facts. Compare and contrast credibility of differing accounts of the same events. Distinguish between fact and opinion: recognize propaganda. Work individually or with others to decide on an appropriate course of action. Work to influence those in positions of social power to strive for extensions of freedom, social justice, and human rights. Select an appropriate strategy to solve a problem. Accept and fulfill social responsibilities associated with citizenship in a free society.
	12th Grade Government Students Will Understand That � Heritage influences political identity. Economic prosperity ensures political stability. The geographical features of a nation influence the relationship between state and federal governments. The principals of a government reflect the values of society. Democracy evolves from the theories of political philosophers. Voters rely on the mass media to form political opinions. Money and the state of the economy influence political decisions. Political demographics vary based on regional interests and values. In a democracy, the election process is designed to provide the people the opportunity to choose the best possible leader. Differing values and beliefs necessitate the formation of political groups. Suffrage distributes political power. Governmental decision-making systems reflect the values of those in power. Democratic governments' manage resources based on the needs of the people. A representative democracy distributes power. A balanced decision process serves the common good. The Legislative body in a representative democracy acts to promote the common good. Communities often experience higher quality of life where there is citizen involvement. Communities rely on both government and philanthropic actions to meet the needs of the people. Resource utilization may be determined by community priorities. Local government functions with the participation of the community. Citizens with dual sovereignty can experience community conflict. The public perception of leaders is influenced by political, social and economic factors. Economic prosperity often ensures the continuity of political power. Regional geographic issues impact political actions. The bureaucracy often functions independently to promote the President's agenda. With leadership comes the temptation for abuse of power. It is the responsibility of the citizen to submit to the law. In a democracy, it is the right of the citizens to change laws they don't believe are just. Equality, Rights, and Freedom are not without cost. Court rulings are affected by the geographic location of the court. Citizens create systems to ensure justice. The interpretation of laws over time shape public conduct. 12th Grade Government Students Will Know � The Code of Hammurabi, Magna Carta, Mayflower Compact, Declaration of Independence, and the Articles of Confederation all contributed to the formation of our government. Governmental contributions of Greece, Rome, and England. The types of economic systems are traditional, command, and market. They types of governments are democracy, dictatorship, unitary, federal, confederate, presidential, and parliamentary. The relationship between economic systems and governmental types. The purpose of the U.S. government is to protect citizens rights while managing national interests The six purposes of government as stated in the Preamble to the Constitution. The Virginia and New Jersey plans, leading to the Connecticut Compromise, illustrate the importance of equal representation. The Constitution, including Bill of Rights and other amendments, is the basic document that guides our government. The basic make-up of the Constitution. Dictatorships through democracies differ in the number of people allowed to participate in government John Locke, Thomas Hobbes, and Jean Jacques Rousseau all influenced the formation of our government How the Constitution illustrates separation of powers, checks and balances and popular sovereignty. The role of media in the political process The various propaganda techniques The factors that influence public opinion The regulations of campaign finance The purpose for the Federal Election Commission The various individuals and organizations that contribute to campaigns and impact of those contributions. The effects of a good or bad economy on an election What political demographics are The traditional voting patterns of various groups and regions The impact of the census on elections The election process The impact the special interest groups have on elections The role of political parties in elections The purpose of a party platform The major political parties and the values they espouse The importance of minor parties How to use a political spectrum in identifying political issues and individual beliefs The critical suffrage amendments and voting rights acts Increased suffrage gives legitimacy to the democratic process A senator serves a six year term and representative serves a two year term A caucus occurs when like minded people meet to make legislative proposals The leadership of the senate consists of president, president pro tempore, majority leaders, minority leaders, and committee chairs. The House leadership consists of the Speaker of the House, the majority leader, the minority leaders, and committee chairs. The Senate and House leadership prioritizes the needs of the nation. The House is made of members that represent a specific number of constituents Apportionment is the process of redrawing congressional districts to provide representation to local voters. The Senate is made up of two members of each state For a bill to become a law it must be 1) introduced by a member of congress, 2) assigned to a committee and debated, 3) debated on the floor, and 4 passed in one chamber 5) identical bill completes process and passed in second chamber, 6) President signs into law, 7) if vetoed, Congress can override with 2/3rd's vote. A filibuster is an attempt to talk a bill to death in the Senate by not giving up the floor and the cloture rule is used to stop a filibuster There are powers denied to Congress, all of their actions must be authorized by the Constitution Parliamentary procedure rules were established in order to make meetings fair and equitable, while controlling time and relevance so that the work of an organization could be accomplished with a minimum of discord and a maximum of productivity The role of Congress has evolved over time and deals less with national policies and more with specific issues The tools Congress uses to gauge public opinion (i.e. polling, interviewing, correspondence etc�) Historic legislation that significantly affected society. (i.e. National Bank, Homestead Act, Civil Rights Act 1964, Affirmative Action) The responsibilities of a citizen (i.e. votes, pays taxes, obeys laws) The benefits of service to community The various private philanthropic organizations in their community The services that state and local governments provide The state and local budget process The factors that influence the budget process The various means of distribution of resources (i.e. zoning, bonds, long term planning) The inherent conflicts over resources between levels of government The structure and powers of state and local governments How local decisions are made Local governments are more susceptible to manipulations of the democratic process The purpose of Native American treaties and the conflicts over sovereignty they create The relationship between the federal, state, and local governments How media influences the public perception of political leaders The political, social, and economic factors that influence an individual's perception of a leader The relationship between prosperity and power The economic factors that influence Presidential decisions. The factors that determine the placement of power (i.e. industry, natural resource, population etc.�) The function of the electoral college The structure of the executive branch The various roles of the Presidency The factors that have influenced the growth of the executive branch over the other two branches The powers of the Presidency as defined by the Constitution 12th Grade Government Students Will Know . . . Cont. How the power of the Presidency has grown over time Significant Presidents and how they have changed the face of the Presidency The rule of law The role of civil disobedience in a democratic society The difference between common law, statutory law, administrative law The difference between civil and criminal law That majority rule is balanced by minority rights The costs to an individual in the maintenance of the judicial system (i.e. taxes, jury duty, etc.) The purpose of the court system is to interpret the law The division of jurisdiction between National and State Courts That court decision are often influence by the location of the court and the selection process of the judges How the court systems are created The basic structure of the both the National and State court system The paths that a case would take through the State and/or National courts The types of jurisdiction The courts are guided by the Constitutional principals of due process and equal protection The rights found in the Bill of Rights The importance of judicial review What role precedents in court decisions The landmark court decisions (i.e. Marbury v. Madison, Dred Scott, Plessy v. Ferguson, Brown v. Board of Ed., Miranda, etc.) 12th Grade Government Students Will Be Able To � Read for a variety of purposes: critically, analytically, to predict outcomes, to answer questions, to form an opinion, to skim for facts Adjust rate of reading to difficulty of the material Predict likely outcomes based on factual material Compare and contrast credibility of differing accounts of the same event Identify a situation in which a decision is required Identify situations in which social action is required Distinguish between fact and opinion: recognize propaganda. Read various forms of printed material: books, magazines, newspapers, directories, schedules, journals. Express personal conviction. Accept and fulfill social responsibilities associated with citizenship in a free society. Self-monitor one's thinking process. Participate in persuading compromising, debating, and negotiating in the resolution of conflicts and differences. Work to influence those in positions of social power to strive for extensions of freedom, social justice, and human rights. Detect bias in visual material. Write reports and research papers. Recognize the values implicit on the situation and the issues that flow from them. Communicate orally and in writing. Interpret graphs. Interpret map symbols and visualize what they mean. Recognize author bias. � Select an appropriate strategy to solve a problem. � Use literature to increase meaning. � Interpret the social and political messages of cartoons. � Note cause and effect relationships. � Draw inference from factual material. � Work individually or with others to decide on an appropriate course of action. � Interpret what is read by drawing inferences. � Form an opinion based on critical examination of relevant information. � Prepare a bibliography. � Recognize value dimension of interpreting factual materials.


		Participation in Government Notes Chapter 1: The Study of American Government What is political power? Two great questions about politics Who governs: the people who govern affect us To which ends: in which ways government affects our lives And then how the government makes decisions on a variety of issues Power Definition: the ability of one person to cause another person to act in accordance with the first person's intentions Text's concern: power as it is used to affect who will hold government office and how government will behave Authority: the right to use power; not all who exercise political power have it Legitimacy: what makes a law or constitution a source of right Struggles over what makes authority legitimate Necessity to be in some sense democratic in the United States today What is democracy? Aristotelian "rule of the many" (participatory democracy) Fifth-century B.C. Greek city-state New England town meeting Community control in self-governing neighborhood Citizen participation in formulating programs Acquisition of power by leaders via competitive elections (representative democracy) Sometimes disapprovingly referred to as the elitist theory Justifications of representative democracy Direct democracy is impractical. The people make unwise decisions based on fleeting emotions. Direct versus representative democracy Text uses the term democracy to refer to representative democracy. The Constitution does not contain the word democracy but the phrase "republican form of government." Representative democracy requires leadership competition if the system is to work. Individuals and parties must be able to run for office. Communication must be free. Voters perceive that a meaningful choice exists. Many elective national offices Most money for elections comes from special interests Virtues of direct democracy should be reclaimed through Community control Citizen participation Framers: "will of people" not synonymous with the "common interest" or the "public good" They strongly favored representative over direct democracy. Direct democracy minimized chances of abuse of power by tyrannical popular majority or self-serving office holders. How is power distributed in a democracy? Majoritarian politics Leaders constrained to follow wishes of the people very closely Applies when issues are simple, clear, and feasible Elitism Rule by identifiable group of persons who possess a disproportionate share of political power Four theories of Elite Influence Marxism: government merely a reflection of underlying economic forces C. Wright Mills: power elite composed of corporate leaders, generals, and politicians Max Weber: bureaucracies based on expertise, specialized competence Pluralist view: no single elite has a monopoly on power; hence must bargain and compromise Cynical view that politics is self-seeking Good policies may result from bad motives Self-interest is an incomplete guide to actions (Alexis de Tocqueville on America) September 11 and self interest AFL-CIO and civil rights Some act against long odds and without the certainty of benefit Political change Necessary to refer frequently to history because no single theory is adequate Government today influenced by yesterday Government today still evolving and responds to changing beliefs Politics about the public interest, not just who gets what Finding out who governs We often give partial or contingent answers. Preferences vary, and so does politics. Politics cannot be equated with laws on the books. Sweeping claims are to be avoided. Judgments about institutions and interests should be tempered by how they behave on different issues. The policy process can be an excellent barometer of change in who governs.

				Economic Notes Ch.1 Chapter 1 Vocab & Notes 12th Grade Economics Vocab: Chapter 1 Chapter 1. Legal, Business, and E-Commerce Environment Chapter Objectives Define law. List and describe the functions of law. Describe the flexibility of the law. List and describe the schools of jurisprudential thought. Explain the development of the US legal system. Explain how English common law was adopted in the US. List and describe the sources of law in the US. Define the doctrine of stare decisis. Describe other countries' legal systems. Describe the development of E-Commerce and Internet law. Apply critical legal thinking in analyzing judicial decisions. Definition of law Law is a body of rules of action or conduct prescribed by controlling authority, and having binding legal force. That which must be obeyed and followed by citizens subject to sanctions or legal consequences is a law. Functions of law Keeping the peace Shaping moral standards Promoting social justice Maintaining the status quo Facilitating orderly change Facilitating planning Providing a basis for compromise Maximizing individual freedom Flexibility of the law Law responds to cultural, technological, economic, and social changes. Laws that are no longer viable are often repealed, although it may take years for that to happen. Sometimes, because of error or misuse, the law does not reach a fair result. Schools of jurisprudential thought Natural Law School�believes law is based on what is correct. Emphasizes that law should be based on morality and ethics Historical School�believes that law is an aggregate of social traditions and customs Analytical School�believes that law is shaped by logic Sociological School�believes law is a means of achieving and advancing certain sociological goals Command School�believes law is a set of rules developed, communicated, and enforced by the ruling party Critical Legal Studies School-believes legal rules are unnecessary and legal disputes should be solved by applying arbitrary rules based on fairness Law and Economics School�believes that promoting market efficiency should be the central concern of legal decision making Feminist School�believes that the female perspective should be taken into account when legislators and judges develop, interpret, and apply law Development of the US legal System The US court system developed from English common law. Under traditional English common law, there were three types of courts: Law courts�courts that developed and administered a uniform set of laws decreed by the kings and queens after William the Conqueror. Legal procedure was emphasized over merits Chancery (equity) courts�courts that granted relief based on fairness Merchant courts�courts established to administer the "law of merchants" Adoption of English common law in the US All states except Louisiana base their legal systems primarily on English common law. Because of its French heritage, Louisiana bases its legal system on civil law. Sources of US law Constitution of the US�supreme law of the US Treaties�compacts made between two or more nations Codified law Statutes�written law enacted by the legislative branch of federal and state governments that establishes certain courses of conduct that must be adhered to by covered parties Ordinances�laws of local government bodies Executive orders�orders issued by a member of the executive branch of government Judicial decisions�decisions about an individual lawsuit issued by federal or state courts Administrative agency regulations and orders�rules and regulations adopted by agencies created by the legislative and executive branches of government Doctrine of stare decisis Precedent is a rule of law established in a court decision. Lower courts must follow the precedent established by higher courts. The doctrine of stare decisis means "to stand by the decision" or adherence to precedent. Other countries' legal systems There are other major legal systems in addition to the Anglo-American common law system. Major systems include: Romano-Germanic civil law system Sino-Soviet Socialist law system Hindu law system Islamic law system E-commerce and Internet Law Our legal system has adapted to the reality of e-commerce and the Internet. For example, contracts on the Internet are treated as any contract is treated under the law. However, there are many issues, such as taxation of sales on the Internet, pornography, intellectual property, etc., that still need to be addressed. Critical Legal Thinking Critical legal thinking is the process of specifying the issue presented by a case, identifying the key facts in the case and applicable law, and then applying the law to the facts to come to a conclusion that answers the issue presented. Use the "case for briefing" exercise at the end of the chapter as a tool to teach students critical legal thinking. Terms case brief�a summary of each of the following items of a case: case name and citation, key facts, issue presented, holding of the court, court's reasoning common law�Developed by judges who issued their opinions when deciding a case. The principles announced in these cases became precedent for later judges deciding similar cases. Constitution of the United States of America�The supreme law of the United States. court of chancery�Court that granted relief based on fairness. Also called equity court. critical legal thinking�the process of specifying the issue presented by a case, identifying the key facts in the case and applicable law, and then applying the law to the facts to come to a conclusion that answers the issue presented. executive order�An order issued by a member of the executive branch of the government. judicial decision�A decision about an individual lawsuit issued by federal and state courts. jurisprudence�The philosophy or science of law. law court�A court that developed and administered a uniform set of laws decreed by the kings and queens after William the Conqueror, legal procedure was emphasized over merits at this time. law�That which must be obeyed and followed by citizens subject to sanctions or legal consequences; a body of rules of action or conduct prescribed by controlling authority, and having binding legal force. merchant court�The separate set of courts established to administer the "law of merchants." ordinances�Laws enacted by local government bodies such as cities and municipalities, counties, school districts, and water districts. precedent�A rule of law established in a court decision. Lower courts must follow the precedent established by higher courts. stare decisis�Latin: "to stand by the decision." Adherence to precedent. statute�Written law enacted by the legislative branch of the federal and state governments that establishes certain courses of conduct that must be adhered to be covered parties. treaty�A compact made between two or more nations. Notes: Chapter 1 I. <!--[endif]-->Definition of Economics A. The social science concerned with the efficient use of limited or scarce resources to achieve maximum satisfaction of human materials wants. B. Human wants are unlimited, but the means to satisfy the wants are limited. <!--[if !supportLists]-->II. <!--[endif]-->The Economic Perspective A. Scarcity and choice 1. Resources can only be used for one purpose at a time. 2. Scarcity requires that choices be made. 3. The cost of any good, service, or activity is the value of what must be given up to obtain it. (opportunity cost). B. Rational Behavior 1. Rational self-interest entails making decisions to achieve maximum fulfillment of goals. 2. Different preferences and circumstances lead to different choices. 3. Rational self-interest is not the same as selfishness. C. Marginalism: benefits and costs 1. Most decisions concern a change in current conditions; therefore the economic perspective is largely focused on marginal analysis. 2. Each option considered weighs the marginal benefit against the marginal cost. 3. Whether the decision is personal or one made by business or government, the principle is the same. 4. The marginal cost of an action should not exceed its marginal benefits. 5. There is �no free lunch� and there can be �too much of a good thing.� <!--[if !supportLists]-->III. <!--[endif]-->Why Study Economics? A. Economics for citizenship. 1. Most political problems have an economic aspect, whether it is balancing the budget, fighting over the tax structure, welfare reform, international trade, or concern for the environment. 2. Both the voters and the elected officials can fulfill their role more effectively if they have an understanding of economic principles. B. Professional and personal applications 1. The study of economics helps to develop an individual�s analytical skills and allows students to better predict the logical consequences of their actions. 2. Economic principles enable business managers to make more intelligent decisions. 3. Economics can help individuals make better buying decisions, better employment choices, and better financial investments. 4. Economics is however, mainly an academic, not a vocational subject. Its primary objective is to examine problems and decisions from a social rather than personal point of view. It is not a series of �how to make money� examples. <!--[if !supportLists]-->IV. <!--[endif]-->Economic Methodology A. Economists use the scientific method to establish theories, laws, and principles. 1. The scientific method consists of: a. The observation of facts (real data). b. The formulations of explanations of cause and effect relationships (hypotheses) based upon the facts. c. The testing of the hypotheses. d. The acceptance, reject, or modification of the hypotheses. The determination of a theory, law, principle, or model. 2. Theoretical economics: The systematic arranging of facts, interpretation of the facts, making generalizations. 3. Principles are used to explain and/or predict the behavior of individuals and institutions. 4. Terminology�Principles, laws, theories, and models are all terms that refer to generalizations about economic behavior. They are used synonymously in the text, with custom or convenience governing the choice in each particular case. 5. Generalization�Economic principles are expressed as the tendencies of the typical or average consumer, worker, or business firm. 6. �Other things equal� or ceteris paribus assumption�In order to judge the effect one variable has upon another it is necessary to hold other contributing factors constant. Natural scientists can test with much greater precision than can economists. They have the advantage of controlled laboratory experiment. Economists must test their theories using the real world as their laboratory. 7. Abstractions�Economic principles, theories or models are abstractions, simplifications, which attempt to find the important connections and relationships of economic behavior. These models are useful precisely because they strip away the clutter and complexity of reality. 8. Graphical Expression�Many economic relationships are quantitative, and are demonstrated efficiently with graphs. The �key graphs� are the most important. B. Policy economics applies economic facts and principles to help resolve specific problems and to achieve certain economic goals. 1. Steps in formulating economic policy: a. State goals. b. Recognize various options that can be used to achieve goals. c. Evaluate the options on the basis of specific criteria important to decision-makers. 2. Economic goals widely accepted in our economy. a. Economic growth b. Full employment c. Economic efficiency d. Price level stability e. Economic freedom f. Equitable distribution of income g. Economic security h. Balance of trade 3. Goals may be complementary (full employment and economic security). 4. Some goals may conflict (efficiency and equity). (Key Question 6) 5. All goals cannot be achieved, so priorities must be set. <!--[if !supportLists]-->V. <!--[endif]-->Macroeconomics and Microeconomics A. Macroeconomics examines the economy as a whole. 1. It includes measures of total output, total employment, total income, aggregate expenditures, and the general price level. 2. It is a general overview examining the forest, not the trees. B. Microeconomics looks at specific economic units. 1. It is concerned with the individual industry, firm or household and the price of specific products and resources. 2. It is an examination of trees, and not the forest. C. Positive and Normative Economics. 1. Positive economics describes the economy as it actually is, avoiding value judgments and attempting to establish scientific statements about economic behavior. 2. Normative economics involves value judgments about what the economy should be like and the desirability of the policy options available. 3. Most disagreements among economists involve normative, value-based questions. <!--[if !supportLists]-->VI. <!--[endif]-->Pitfalls to Objective Thinking A. Biases�Preconceptions that are not based on facts. B. Loaded terminology. 1. Terms that contain the prejudice and value judgments of others. 2. It is very difficult for a person to describe economic behavior without letting their options about that behavior creep into their discussion. The distinction between positive and normative statements is not always clearly apparent. 3. Often, however, there is a deliberate attempt to sway opinion by using loaded terminology. (greedy owners, obscene profits, exploited workers, mindless bureaucrats, costly regulations, creeping socialism) C. Definitions 1. Economics is a second language. 2. It is often difficult for students to recognize terms as new vocabulary that needs to be studied as diligently as though they had never before encountered the words. 3. Students in a physics class encountering terms like erg, ohm, or foot-pound recognize the need to investigate. Students that are reading a text filled with words like rent, capital, or investment assume that they already have an adequate working definition. D. Causation Fallacies 1. Post hoc fallacy: When two events occur in time sequence, the first event is not necessarily the cause of the second event. 2. Correlation versus causation: Events may be related without a causal relationship. a. The positive relationship between education and income does not tell us which causes the increase in the other. (Which is the independent variable and which is the dependent variable?) b. It may be that the increase income that occurs with increased education is due to some other third factor that is not under direct consideration. <!--[if !supportLists]-->VII. <!--[endif]-->A Look Ahead A. Chapter 2 builds the production possibilities model that visually demonstrates the basic economic principles of scarcity, choice, opportunity cost, and the law of increasing costs. B. Chapter 3 builds the supply and demand model for individual markets. C. Chapter 4 combines all the markets in the economy and observes the coordination of economic activity through market prices. D. Chapters 5 and 6 examine the important sectors of the economy (households, businesses, government, and the international sector) discussing their role and interaction. <!--[if !supportLists]-->VIII. <!--[endif]-->LAST WORD: Fast Food Lines�An Economic Perspective A. People choose the shortest line to reduce time cost. B. Lines tend to have equal lengths as people shift from longer to shorter lines in effort to save time. C. Lines are chosen based on length without much other information�cost of obtaining more information is not worth the benefit. 1. Imperfect information may lead to an unexpected wait. 2. Imperfect information may cause some people to leave when they see a long line. D. When a customer reaches the counter, other economic decisions are made about what to order. From an economic perspective, these choices will be made after the consumer compares the costs and benefits of possible choices.

				Unit One - Basic Economic Concepts Wants - Simply the desires of citizens. Wants are different from needs as we will see below. Wants are a means of expressing a perceived need. Wants are broader than needs. Needs: These are basic requirements for survival like food and water and shelter. In recent years we have seen a percieved shift of certain items from wants to needs. Telephone service, to many, is a need. I would argue, however, that they are wrong. Scarcity - the fundemental economic problem facing ALL societies. Essentially it is how to satisfy unlimited wants with limited resources. This is the issue that plagues all governmet and peoples. How do we conquor the issue of scarcity? Many people have thoaught they had the answer (see Marx, Smith, Keynes, etc.) but the issue of scarcity still exists. Factors of Production/Resources - these are those elements that a nations has at its disposal to deal with the issue of scarcity. How efficiently these are used determines the measure of success a nation has. They are Land - natural resources, etc. Capital - investment monies. Labor - the work force; size, education, quality, work ethic. Entrepreneurs - inventive and risk taking spirit. This is a rather new addition to a tradirtional list. The "Three Basic Economic Questions" - these are the questions all nations must ask when dealing with scarcity and effcientlly allocating their resources. What to produce? How to produce? For whom to produce? Economics - Economics is the study the production and distribution of goods and services, it is the study of human efforts to satisfy unlimited wants with limited resources. Opportunity Cost - the cost of an economic decision. The classic example is "guns or butter." What should a nation produce; butter, a need, or guns, a want? What is the cost of either decsion? If we choose the guns the cost is the butter. If we choose butter, the cost is the guns. nations bust always deal with the questions faced by opportunity cost. It is a matter of choices. Resources are limted thus we cannot meet every need or want. Free Products: Air, sunshine are and other items so plentiful no one could own them. Economists are interested in "economic products" - goods and services that are useful, relatively scarce and transferable. Good: tangible commodity. These are bought, sold, traded and produced. Consumer Goods: Goods that are intended for final use by the consumer. Capital Goods: Items used in the creation of other goods. factory machinary, trucks, etc. Durable Goods: Any good that lasts more than three years when used on a regular basis. Non Durable Goods: Any item that lasts less than 3 years when used on a regular basis. Services: Work that is performed for someone. Service cannot be touched or felt. Consumers: people who use these goods and services. Conspicuous Consumption: Use of a good or service to impress others. Value: An assignment of worth. The assignment is usually based upon the utility (usefulness) or scarcity of the item (supply and demand). Utility: capacity to be useful. Paradox of value: assignment of the highest value to those things we need the least, like water and the highest things we often don't need at all like diamonds. Why do we do this? Good question. I do not have an answer. Wealth: the sum collection of those economic products that are tangible, scarce and useful. Productivity - the ability to produce vast amounts of goods (economic products) in an efficient manner. The American capilist economy is productive because: We use our resource efficiently. We specialize to increase efficiency and productivity. We invest in Human Capital (our labor pool)

			Comparative Economic Systems As we have said, all nations must answer the question of scarcity. All nations and societies must alocate their resources in order to meet their needs. This is where the essential dilemma between unlimited wants and limited needs comes into play. We have also noted that all nations must make choices. This is a matter of resource allocation. When we allocate limited resources we make choices. The cost of these choices is known as opportunity cost. When making these choices and dealing with rscarcity, resource allocation and opportrunity cost nations are answering what we have previosly referred to as the three basic economic questions. These are are the questions all nations must ask when dealing with scarcity and effcientlly allocating their resources. They are: What to produce? How to produce? For whom to produce? Each nation and society thus must make choices and deciiosn based upon there own values. If a society values meeting more wants and needs at the expense of freedom of choice then they may choose a system radically different then our own. Thus we have seen the creation of a variety of economic systems. Economic systems are divided up into three basic types. These types are: Traditional Economic Systems Market Economic Systems Command Economic Systems Traditional Economic System A traditional economic system is one in which people's economic roles are the same as those of their parents and grandparents. Societies that produce goods and services in traditional ways are found today in some parts of South America, Asia, and Africa. There, people living in an agricultural village still plant and harvest their own food on their own land. And the ways they produce clothing and shelter are almost exactly the same as those used in the past. Tradition decides what these people do for a living and how their work is performed. Market Economic System A market economic system is one in which a nation's economic decisions are the result of individual decisions by buyers and sellers in the marketplace. The U.S. has a market economic system. When you finish school, you may go to work where you choose, if a job is open. You are also free to go into business on your own. Suppose that you decide to open a business. You will risk the money that you have saved or borrowed in the hope that you will be successful. The price that you charge for your goods or services will be influenced by the prices charged by your competitors (other businesses selling the same items). The success that you have will depend on the demand by consumers for your goods. You may do extremely well. But if people do not want what you are selling, you will go out of business. Command Economic System In a command economic system, the main decision maker is the government. No person may independently decide to open and run any kind of business. The government decides what goods and services are to be produced. And the government sells these goods and services. The government also decides how the talents and skills of its workers are to be used. WHO OWNS THE MEANS OF PRODUCTION IN ECONOMIC SYSTEMS? We have classified economic systems according to the way they answer three basic questions of what, how, and who. A fourth question that should be asked is, "Who owns the means of production?" An economy's means of production are its capital: factories, farms, shops, mines, and machinery. The means of production are used to produce other goods and services. If the government owns and operates almost all of the nation's means of production, then that nation's economic system is called communism. China has a communist economic system. Almost all of the means of production are publicly owned-that is, owned by the government. Government planners decide the answers to the basic economic questions. Farming on private plots of land is sometimes allowed. In recent years, the Chinese government has been allowing more and more private businesses to operate. If the government owns and operates many of the nation's major industries-such as banks, airlines, railroads, and power plants-but allows individuals to own other businesses, including stores, farms, and factories, that nation's economic system is called socialism. Sweden is an example of a country whose economic system is often described as socialist. Most of its major industries, such as coal mining, electric power, gas, telephone, and railroads, are owned by the government. Under Sweden's national health insurance system, the people receive free medical services all their lives. If almost all the stores, factories, and farms in a nation are owned and operated by private individuals or businesses, then its system is called free enterprise, or capitalism. The U.S. has a free enterprise, or capitalist, economic system. No country has an economic system that is 100 percent communism, socialism, or capitalism. All countries today have mixed economic systems or mixed economies, with some free enterprise and some government ownership. In the U.S., as in most capitalist countries, there are many examples of government ownership. Public colleges, high schools, and elementary schools, for example, are owned and operated by state or local governments. Other publicly owned enterprises are the postal service, many municipal bus lines and trains, a few electric power plants, and housing projects.

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