THE UNITED STATES ECONOMYChapter 4 Section 3

The Study of Economics• Things that make up our market economy

• Business start ups & shutdowns• Rise and fall of people’s confidence in something• Increase and decrease of jobs

• State of the economy• Investors• Service providers (monopolies)• Manufacturers• Consumer choices (what if we don’t like something?)

Goods and Services• You want the new Ariana Grande CD

• How will you earn money for it?• Raking leaves• Babysitting• Mowing the grass

• The CD itself is called a good.

• Goods versus Services• Goods – any object you can buy to satisfy a want• Services – any action that meets a want

What to Buy?• Have basic needs you have to satisfy to live

• Food• Clothing• Housing• Transportation• Childcare• Medical treatment

• Wants• Music• Skates• Computer games• Vacation• Movies

A Growing Economy• Nations must produce goods and provide services to support

their economy.

• To continue a growing economy business have to keep production at a high level. This allows them to keep up with demand.

• Factors of production: Ingredients needed for production to happen. • Natural Resources – raw materials used to make goods • Labor Resources – workers needed to make goods• Capital Resources – machines, factories, and supplies needed• Entrepreneurs – bring the resources together to produce goods and

services.

The United States Economy• One of the wealthiest in the world

• GDP – “Gross Domestic Product” tells the total value of all goods and services of a country. • Use this to compare different countries

• US industries services• Health care• Legal services• Communications – publishing, TV, radio, phones, mail delivery• Finance – banks and stock markets• Manufacturing – food products, cars, clothing• Electronics – TV, computers, sound equipment

Free Enterprise or Market Economy• US citizens make most economic decisions in our

economy.

• Free enterprise/market economy – government does not control the economy• How much or which goods are produced• Set prices or tell you where to work.

• Free Enterprise elsewhere• Canada• Western Europe• Japan• Some Latin American countries

Supply and Demand• Consumers – the people who use goods and services• Profit – the money that remains after all costs to produce

something have been paid

• Rice Krispy Treat Supply and Demand

• Competition – the rivalry among businesses to sell goods to consumers • Ford vs Chevrolet • Apple vs Android / Microsoft• Pepsi vs Coke

Other Economic Systems• Countries combine features from 3 types of economic

systems• Market, command, and traditional economies

• Command Economy• The Government decides how many of which goods are produced

AND sets the price. • Countries: North Korea, Cuba, China has pieces of Market and

Command Economies

• Traditional Economy• Social roles and culture determine the economy• A family’s status can determine whether they own a tractor

• Counties: India has both Traditional and Market Economies

The Global Economy• Communication and transportation have helped increase the

trade among countries

• The movement of people has helped create a worldwide economy, with the US being a leader

• Expanding trade can open new markets we didn’t have before

• Countries can create barriers to restrict trade

• Tariffs or taxes on things that are imported• British Tea