DO NOW ACTIVITYDO NOW ACTIVITY

Why do you think that some countries grow at a faster pace than other countries?

What contributes to this growth?

TURN IN BELL RINGER

Macroeconomics- the study of behavior and decision making of entire economies. Trends of the economy as a whole

Microeconomics- study of the economic behavior and decision making of small units. Individuals, families, households, and businesses.

Economists measure economic well-being by calculating the nation’s gross domestic product (GDP)—the total value of all final goods and services produced in an economy. Follow GDP to predict business cycles

Business Cycle- period of macroeconomic expansion followed by a period of contraction (decline). May last a year or continue for many years. The government plays a role in attempting to prevent wild

swings in economic behavior. Where we are in the business cycle affects our every day life

Tracking the Business CycleTracking the Business Cycle

Promoting Economic Promoting Economic StrengthStrength

The government creates public policy to stabilize the economy—policy makers want high employment, steady growth, and stable prices.

Employment- the federal government wants to provide jobs for everyone who is able to work. We want an unemployment rate of about 4-6 %.

Growth- We want a higher standard of living than that of previous generations. For each generation to do better—the economy

must grow to provide better goods and services to following generations. (GDP measures such growth!)

Economic Citizenship- As a voter—your elective choices will help guide government economic policy (like Obama trying to pass the Health Care Bill)

Cont.Cont.

Stability- gives consumers, producers, and investor’s confidence in the economy and in our financial institutions. General price levels are one indicator of stability

When prices increase—consumers feel the strain (especially those on fixed incomes)

When prices decrease—producers and consumers feel the strain.

The health of the nation’s financial institutions are another indicator of stability We want to know that when we go to the bank, our money

will be protected from fraud or mismanagement and shielded from the effects of economic downturn.

Federal government monitors and regulates American banks and other financial institutions.

Technology and Technology and ProductivityProductivity

The American economy maintains a far higher standard of living than most of the world.

We can preserve a higher standard of living by increasing productivity—shifting the production possibilities frontier outward. Through work ethic (a commitment to the value of work and purposeful activity).

We can also increase productivity through Technology.

Technology- the process used to produce a good or service. Improvements allow an economy to produce more

output (goods and services) from the same or smaller amount of inputs or resources. **We can produce more with less goods (or at least the same

amount) ** Technology allows the U.S. economy to operate more

efficiently and productively.

Government’s RoleGovernment’s Role

Governments role- the government provides incentives for innovation (because innovation helps the economy grow) Government gives (FREE MONEY) grants to research and

development projects Government’s own research institutions produce new

technologies NASA- creates technology to blast humans into outer space!

NASA also produces “spinoffs” for products that have commercial use Scanner for firefighters to see “invisible flames” Muscle stimulator for paralyzed people

Government also offers inventors patents and copyrights. Patent- gives the inventor exclusive right to produce the

product for 20 years! Copyright- grants an author exclusive rights to publish and sell

their creative works.