Unit 2: Basic Economic Principles: Supply, Demand, & the U.S. Financial System

Transcription

1 Due 3 days before your unit test. A soft copy is also available in google classroom. Unit 2: Basic Economic Principles: Supply, Demand, & the U.S. Financial System LESSON 1: Scarcity & Economic Decision making 1. Define scarcity and give an example of how scarcity affects economic choices. 2. Create your own example that demonstrates the concept of opportunity cost. 3. Give two examples of economic wants and two examples of economic needs. Wants Needs How does scarcity influence microeconomic decision making? 1

2 Lesson 2: Competition, Supply, & Demand in a Market Economy How do the principles of supply, demand, & competition guide economic choices? 4. How does competition affect producers in a market economy? 5. How does competition affect consumers in a market economy? Use the bulleted terms below to fill in the blanks below from lesson 3. Some may be used more than once. Supply Demand Equilibrium Price Karl Marx Adam Smith Laissez Faire Profit Motive Substitute Good Complementary good 6. The law of states that as prices go down, consumers are more likely to buy a product. 7. The law of states that as prices go up, producers are more willing to make and sell a product. 8. wrote the Communist Manifesto and supported Socialist economics. 9. is defined as the desire, willingness, and ability to purchase a product. 10. these increase demand for other economic goods that they might be used in tandem with. An example would be cell phones and cell phone cases. 2

3 11. Explain Adam Smith s theory of supply and demand using his metaphor of an invisible hand. 12.Use the snow cone demand and supply schedules provided to complete the following activities. Demand schedule for Snow Cones SUPPLY schedule for Snow cones $ $.50 0 $ $ $ $ $ $ $ $ a. Draw and label the demand curve on the graph below. b. draw and label the supply curve on the graph below. c. The equilibrium price for snow cones is: $ d. At what price would there be a snow cone shortage? e. At what price would there be a snow cone surplus? f. A new vendor (entrepreneur) starts to sell ice cream sandwiches for $.75 each. What happens to the demand for snow cones? 3

4 Lesson 3: Factors of Production What factors must must societies consider when making decisions about the distribution of economic resources? 13.List the four factors of production and describe the relevance of each in producing a wooden chair. Remember CELL. a. C b. E c. L d. L 14.Use the graph to the right to describe how money circulates in the economy. Lesson 4: Economic Indicators: Measuring the Health of Our Economy 1. How do we evaluate the strength of the economy? 4

5 15.Describe in economic terms what the image above is showing. Be as specific as you can by using at least three vocabulary terms from this lesson. 16.Describe the relationship between consumer confidence, recessions, and the unemployment rate. Lesson 5: Regulating the Economy: The Role of Government What role do you believe the government should play in the economy? 5

6 17.Describe the difference between fiscal and monetary policy. Give one example of each. Use the bulleted terms below to fill in the blanks below from lessons 4 and 5. Some terms may be used more than once, and others may not be used at all. Inflation Gross Domestic Product Consumer Price Index Exchange Rates Business Cycle Tight money policy loose money policy Recession 18.A primary goal of monetary policy set by the Federal Reserve is to control. 19.The determines the value of the dollar compared to foreign currencies. 20. measures the rise in prices over time of a certain set of goods. 21. would be adopted by the Federal Reserve bank if it wants people to spend more money to stimulate the economy. This might be accomplished by lowering the discount rate or reserve requirement, or by buying back government bonds. 22. measures the total value of all the goods and services produced and sold within an economy. This is the economic indicator that economists rely on the most. 23.The image above depicts the 6

7 Lesson 6: Economic Systems What are the core differences between traditional, command, market, and mixed economies? What are the advantages of each? Disadvantages? 24.Match the characteristics below to the economic systems on the chart.(some may fit in more than one category). lots of competition government sets prices customs guide economic choices large gap between rich and poor economic choices are left up to producers and consumers capitalism no or very limited competition less consumer choice government sets some rules government makes economic choices profit motive Traditional Economy Market Economy Command Economy Mixed Economy