Civics and Economic Study Guides
Civics and Economic Study Guides document sample
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GUIDE TO THE EOC FOR CIVICS AND ECONOMICS Goal #1 Foundations of the American Political System 1.01 1.04 Pre-Revolutionary America The British North American Colonies were divided into the Northern, Middle, and Southern colonies. Jamestown, Virginia, the first successful English colony, was founded in 1607. Most of the colonies were founded by religious dissenters. Those dissatisfied with the Church of England were called Pilgrims. They were followed by others called Puritans, who wanted to build communities based on strong biblical teachings. And, Catholics founded the colony of Maryland. Most colonies tolerated different religious groups. Roger Williams, a Puritan dissenter, left Massachusetts and started the colony of Rhode Island. Quakers who professed non-violence and got along with the Indians were led by William Penn who founded Pennsylvania. While many colonists came to America to escape religious persecution, they did not practice religious tolerance and dissenters where forced to endure the Salem Witch Trials. Northern colonies became centers for trade and manufacturing while the South relied on agriculture. Land ownership in the South was restricted to a few wealthy families who owned large plantations. Many workers in the colonies were indentured servants that had come to America by agreeing to work for a period of time to pay back those that had loaned them money for the passage. Slaves began to arrive (mostly in the South) in the 1620s and worked on plantations. These slaves were the property of their owners and by the 1680s the slave trade was thriving. That trade was called the Triangular Trade Route - Europe, Africa, and North America. The captured Africans were crammed onto ships for the Middle Passage. The colonies existed under an economic system called mercantilism, countries should export more than they import in order to make money. Colonies came in 4 types: joint-stock where investors paid shares for a chance to make a profit in the new colony, proprietary where one person owns the colony, royal where the king retains ownership and hires a governor to run things, and self-governing where the people were allowed to run it themselves. Virginia was the best known self-governing: run by the elected House of Burgesses. In New England, land owning males held town meetings to vote on all matters. This was truly government by the consent of the governed. In the colony of Massachusetts Bay only church members had suffrage, could vote. Women and blacks could not vote in this period. Religion was the dominant part of people’s lives. In the mid-1700s the First Great Awakening swept the colonies with religious leaders promoting a spiritual and moral rebirth. Nationalism, a loyalty to the country, started to take hold in the colonies. In 1676, Nathaniel Bacon, a Virginia planter clashed with the governor, led a rebellion against the crown by burning Jamestown. This rebellion showed that average colonist wanted some control of their government and became the forerunner of the Revolution. 1.02, 1.03 The American Revolution The Greeks practiced democracy, people rule. And, the Romans founded a republic where the people elect representatives to vote for them. The Magna Carta limited the power of the King by granting some power to the nobles in 1215. English Common Law was based on customs and court decisions (precedents). In 1689, Parliament passed the British Bill of Rights which announced that people have certain rights just for being people. Social Contract says that the power of government comes from the governed. The Pilgrims founded the Plymouth colony in 1620 based on the Mayflower Compact. This was followed by the Fundamental Orders of Connecticut that said the power of the government came only from the “free consent of the governed”. Virginia’s House of Burgesses became the first representative body in the New World. In New England, town meetings were the first form of direct democracy. A republic is a political system where the supreme power rests with the citizens. The founding fathers believed in majority rule, civil liberties, and limited government. In the 1600s, the Brits passed the Navigation Acts allowing the colonies to only trade with the mother country. From the Navigation Acts until the mid-1700s, the British paid little attention to the colonies in a period known as Salutary Neglect. During this time the colonies enjoyed self government. Between 1754 and 1763, the Brits and the French fought the French and Indian War. In 1754, the Albany Plan of Union was proposed by Ben Franklin. He suggested that the colonies unite for protection against the Indians. The colonies were then taxed to pay for the war. Salutary neglect was over. In the Proclamation of 1763, England prohibited the colonists from settling west of the Appalachian Mountains. Writs of Assistance were passed allowing the Brits to search people’s homes. Some argued that “taxation without representation is tyranny”. The Stamp Act was passed in 1765 placing a tax on all materials printed on paper. The colonists were enraged. A group known as the Sons of Liberty formed to oppose the Crown. A Stamp Act Congress met to oppose the new law and petitioned the king. Parliament disagreed with the Stamp Act Congress by passing the Declaratory Act which said that the Brits could tax the colonies without consulting them. The Quartering Act required colonists to provide housing for British soldiers. In 1773, the Boston Tea Party took place dumping British tea into Boston Harbor. The Brits responded by passing the Intolerable Acts further punishing the colonies. These acts moved the colonists closer to rebellion. Thomas Paine argued for independence in Common Sense. In 1776, the Second Continental Congress passed the Declaration of Independence as written by Thomas Jefferson declaring that the colonies had become an independent country. 1.05 The Articles of Confederation The first national congress was established, but was too weak to handle the problems of the country: couldn’t regulate commerce, couldn’t collect taxes, or raise an army. The Articles did some good: ratified the treaty ending the war and the Northwest Ordinance that provided for westward expansion. How could we create a stronger national government? The New Jersey Plan: 3 branches of government including a congress based on equal representation for the states. The Virginia Plan: 3 branches with a congress based on proportional representation (the number of representatives based on population). Neither plan was adopted. Delegates met in Philadelphia to find a solution. The solution was the Great Compromise, also known as the Connecticut Compromise, which provided for 2 houses. One based on population (House) and the other based on equal representation (Senate). The 3/5 Compromise allowed for slaves to be counted as 3/5 of a free person for arriving at a state’s population. The Bill of Rights was added to protect the individual freedoms. 1.06, 1.07 Philosophical Foundations The convention was divided into 2 groups: The Federalists led by Hamilton that wanted a strong federal government and the Anti- Federalists led by Jefferson that wanted the states to remain strong. Hamilton’s group wanted a “loose” interpretation of the Constitution to allow for greater power for the national government. Jefferson’s group wanted a “strict” interpretation that would be restrictive on the national government. The two groups did compromise in order to create the Constitution. A government with 3 branches: legislative, executive, and judicial. Each of these branches would have “checks and balances” over the other two. The Constitution was ratified by the states in 1787 and George Washington was elected president in 1788. The Bill of Rights guaranteed personal liberties. #1 Basic freedoms of speech, religion, assembly, petition, and press #2 Right to keep and bear arms #3 No quartering of troops #4 No unreasonable searches and seizures #5 Rights of the accused including: due process; no self incrimination; double jeopardy #6 Speedy and public trial #7 Trial by jury. #8 No excessive bail or unusual punishments #9 Rights saved for the people #10 Powers reserved for the states 1.08 American System of Government Types of government include: dictatorship – one man rule; anarchy – no government; totalitarianism – governments holding absolute power; monarchy – ruled by a king or queen; limited monarchy – king or queen with a parliament; theocracy – religious rule; oligarchy – a government led by a few; aristocracy – led by the elite class; democracy – government of the people; republic – a government from the people; federalism – a government with the federal government being stronger than the state or local governments. Goal #2 Democracy in America 2.01 The Constitution The American government is described best in the Preamble: form a more perfect Union, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty. The Constitution is based on popular sovereignty (power of the people) and limited government. There are enumerated powers given specifically to the federal government and reserved powers retained by the states. The elastic clause gives Congress the flexibility to “make all laws necessary and proper” through implied powers which are not written into the document. Expressed powers are granted by the Constitution while Delegated powers are specifically assigned to the federal government. The Supremacy clause gives the federal government authority over state and local laws. The federal government is divided into 3 branches: legislative, executive, and judicial. Each of the branches exercises checks and balances on the other two. This system keeps one branch from overpowering the other two. 2.02, 2.03 The Three Branches The rule of law implies that authority is in the laws and not in people. The Legislative Branch consists of the House and the Senate. The House consists of 435 representatives that serve 2 year terms. The Senate consists of 100 senators with 2 from each state elected to 6 year terms. The House is presided over by the Speaker of the House as elected by the majority party. The Vice President serves as President of the Senate when he is there. Majority and minority leaders are selected by their respective parties. The major function of Congress is to introduce bills and turn those bills into laws. But, bills can be vetoed by the president. But,…..Congress can override vetoes with a 2/3 majority vote. Both houses operate under a committee system and a seniority system which gives power to those that have served the longest. Bills are introduced by a member….assigned to a committee for review….if approved in committee moves back to the whole body for debate….if approved by that body it moves to the other body….when both bodies approve the bill it goes to the President for his signature. Legislators may prevent a bill from coming up for a vote by using the tactic called “filibuster” where someone talks and talks and talks delaying a vote on a bill. Filibustering can be stopped by a cloture vote which requires a 3/5 vote. Congress has other duties not connected to passing bills. Impeachment (removing a government official), censure (a vote of disapproval for misconduct). The Congress may not make some laws. There can be no laws interfering with writs of habeas corpus, which says that no one may be held without due process. There can be no laws issuing a bill of attainder, where a person is punished without a trial. And Congress may make no ex post facto laws, laws made after a crime is committed. The Executive Branch is headed by the president. The president has several roles: chief executive of the nation, commander in chief of the armed forces, head of state and chief diplomat, and leader of his party. The president delivers the State of the Union address to Congress each year. He also may issue executive orders that carry the weight of law. The Judicial Branch consists of a network of courts headed up by the nine member Supreme Court. The Supreme Court: has original jurisdiction in some cases which means it is the first court to hear a certain type of case, has appellate jurisdiction to review cases from the lower courts, concurrent jurisdiction which shares authority with lower courts, and exclusive jurisdiction which gives authority solely to the Supreme Court. Judicial review allows the Supreme Court to declare laws unconstitutional. 2.04 Amending the Constitution Amendments are additions to the document. There have been 27 amendments over the 217 years. Any amendment requires congressional action of 2/3 vote, and approval ¾ of the state legislatures. The first 10 amendments are the Bill of Rights. Others include: #13 abolishing slavery, #14 granting citizenship to all Americans, #19 giving women the right to vote, #22 limits the president to 2 terms, and #25 defining presidential succession. 2.05 Testing the Constitution Through Cases The Marshall Court…. Marbury vs. Madison…..established the rule of judicial review. McCullough vs. Maryland…..power of the federal government over the states. Gibbons vs. Ogden…..power of the federal government to regulate commerce. Cases dealing with race: Plessy vs. Ferguson…..principle of “separate, but equal” Brown vs. Board of Education…..overturned Plessy “separate, but equal is not equal”. Swann vs. CMS….. busing of students may be used to combat segregation. Korematsu vs. US….. due process can be denied in a time of national emergency. 2.06 Rights of the Individual The Supreme Court is the highest judicial authority in the land. It is the final word on all laws. Cases protecting individual rights: Texas vs. Johnson…..burning the American flag is protected as free speech. Engel vs. Vitale….. prayer in schools was banned. Gideon vs. Wainright…..the right to legal representation to those accused of a crime. Miranda vs. Arizona…..rights at the time of arrest like “right to remain silent”. Tinker vs. Des Moines Schools…..students have the right to voice their opinions. New Jersey vs. TLO…..students may have reasonable searches of their bags and lockers. Bakke vs. California…..reverse discrimination, affirmative action is OK, but no quotas. 2.07 Federalism Today Power is divided between the States and the Federal government. Many argue the role of the states in making and enforcing laws. There must be “separation of church and state” the government can not create a religion or prohibit a person from worshipping as he/she pleases. The underlying principle of the American system of government is “majority rules/minority rights”. 2.08, 2.09 Taxation and Government The government has a national budget which details how the government will spend its’ money. Revenue is the amount of money taken in by the government. A balanced budget spends the same amount it takes in through revenues. Deficit spending occurs when the government spends more than it brings in. A surplus occurs when the government brings in more revenue than it spends. Most governmental revenues come through income taxes which takes a percentage of each person’s income. In the USA we have a progressive income tax which takes a larger percentage out of earnings as earnings increase. Ie.. the more you make the higher percentage you pay. The Internal Revenue Service (IRS) collects the taxes. Other taxes include: excise taxes paid on consumption of goods (gasoline, tobacco, phone time) and estate taxes paid from inheritances (you can’t avoid taxes even in death). The government spends most of its’ money for defense and entitlement programs. Crime control expenditures include: the FBI, the DEA, the ATF (Bureau of Alcohol, Tobacco, and Fire Arms). National security expenditures include: the CIA, Department of Homeland Security, and the Bureau of Immigration and Naturalization. Other expenditures include: Roads through the DOT and NTSB (National Transportation Safety Board), Center for Disease Control, Medicare, and Medicaid. Goal 3 North Carolina Government 3.01 3.02 Government The NC Constitution may be amended by two methods: majority vote of the people and by a 3/5 vote in both houses of the General Assembly. NC confirms “popular sovereignty” government is subject to the will of the people. NC has limited government, separation of powers, and checks and balances. NC’s chief executive is the governor who is elected to a 4 year term as is the second executive, the lieutenant governor who also acts as the president of the senate. Other state leaders include members of the council of state who are all elected and serve 4 year terms. The legislative branch creates laws (statutes). This General Assembly is composed of a 50 member Senate and a 120 member House. Local governments include: counties run by a board of commissioners, cities run by a council and mayor (or council and manager), and townships. School boards are also a local council designed to run a school district. Law enforcement: sheriffs (elected) for the counties and chiefs of police (appointed) for the cities / towns. 3.03 3.04 3.05 Checks and Balances NC has many state agencies operating under the office of the governor: Health and Human Services, Transportation, Parks and Recreation, and more. Judges decide cases brought before the courts for justice. The highest court in NC is the Supreme Court. The 2 landmark cases in NC were: State vs. Mann (1829) ruling that slaves were not people, but property; and Leandro vs NC (2002) all children in NC are entitled to a quality education. 3.06 3.07 Authority NC protects civil rights and voting rights. Municipalities (cities and towns) may extend their control of land by annexation. NC must have a balanced budget. Charter schools are independent and free of state and local regulations. 3.08 3.09 NC Taxes Property tax – on value of real estate Corporate income tax – on business profits Personal income tax – on people’s earnings Sales tax – on sales of goods and services Estate tax – on estates of people who died Excise tax – on production and sales of certain products Inheritance tax – on property when it is inherited NC also gets revenues by: fines, licenses, permits, user fees, disposal fees, and impact fees. NC has a budget to measure revenues (income) and expenditures (spending). NC spends most of its money on education, but also finances health and welfare, and the state colleges and universities. Local agencies provide other services: public transportation, jails, airports, libraries, roads, water, sewers, and public housing. Goal 4 Politics 4.01 4.02 4.03 Politics and elections Political parties are organizations that promote certain ideas and people. The 3 functions of political parties are: 1. to gather together people with similar values and views 2. to govern in a predictable way 3. to compete in elections. Parties have platforms that express where the party stands on various issues. America has a 2 party system: Republicans and Democrats. There are 3rd parties (minor) that influence elections from time to time. Political parties are generally defined by their political views: The Republican Party is more conservative (small government and personal freedoms) while the Democratic Party is more liberal (large government and social programs). Both parties have radical that want to make big changes, and moderates that change needs to come from within the government. Elections may be partisan with both parties having candidates or non-partisan where the candidates do not list their party affiliation on the ballot. General elections are for national and state choices, and primary elections held within the parties to get candidates for the general election. Plurality means the winner gets the most votes; a majority means that the winner must also get more than 50% of the total votes cast. Prior to and after elections groups take polls that indicate for whom they intend to vote. These polls are used to help predict the outcomes of elections. Some polls are conducted done through canvassing by going door to door, over the phone, or on the internet. The election process begins with voter registration in which eligible voters sign up to vote. Voters go to the polls to vote on punch cards, computers, or on machines. Votes are tallied and the candidate with the majority of the votes cast is the winner. (In presidential elections the candidate with a plurality wins all of the state electors. The state electors then submit their results to the Congress to count and declare a winner. 4.04 Political Action People can voice their opinions on issues by their vote, through petitions, and through paid lobbyists. When those methods don’t work then some turn to protests through marches, demonstrations, boycotts, and civil disobedience. Public opinions are taken through surveys and polls. Both should be random in nature to eliminate bias. Leaders of movements are called activists. In politics there is a lot of name calling and accusations. Illegal name calling may be in written form called libel and in spoken form called slander. 4.05 Laws Law is divided into criminal law (penal law) that punishes criminals for committing crimes against the state, and civil law that regulates the relationships between people and between businesses. Society requires to have laws, so that we will not have anarchy (a government with no laws). The government is responsible to make sure that people can live their lives without interference or violence. In civil cases there is a plaintiff that brings the case. The plaintiff is looking for damages in terms of money or some other action. Civil disobedience involves breaking an unjust law to bring attention to that matter. (Martin Luther King) 4.06, 4.07 Civic Participation Citizens are bound together by basic values and principle. Citizens give up a portion of their liberty to the government in return for safety and basic rights. Citizens give their consent to the government by voting. Another form of participation is through jury duty. Patriotism is the support and love of one’s country. This may include fighting in the military if needed. Americans also volunteer in programs such as the Peace Corps (helping in poor countries) and Senior Corps (older citizens working in communities). 4.08 , 10.01, 10.04 Civic Involvement Citizens have a responsibility to participate in their government. Citizens have a financial responsibility to pay taxes. Voting is the number one responsibility of a citizen. Another way to assume responsibility is through community service (volunteerism). The difference between personal and civic responsibilities is that personal responsibilities emphasizes your own welfare while civic responsibilities express support for society as a whole. Citizens should exercise certain civic values such as respect and tolerance, cooperation and compromise, and collaboration. Legal responsibilities mean simply following the laws. Moral responsibilities mean looking out for the common good above self-interest. 4.09, 10.05 Conflict and Resolution Public issues and problems affect society as a whole. Public issues and problems may include: taxation, the economy, unemployment, poverty, aging, acid rain, global warming, government corruption, crime and punishment, racism, and education. Apathy is just not caring or having an interest in an issue. Conflict is a part of democracy and the resolving of conflicts is at the heart of democracy. Some disputes go to court for judgment; other disputes go to arbitration (letting a third party make the decision) or mediation (a third party helps the two sides come to a compromise). Negotiation is talking to each other in order to reach a compromise such as a union and management on a new contract. Goal 5 Justice and Society 5.01 , 5.04 Public Debate A Law is a legal document through which a rule of conduct is established and enforced. An Act is A term used for a law, bill, or statute. In a democracy citizens must resolve conflicts between competing interests. In a democracy a degree of majority rule usually wins. But, sometimes a consensus (looking for common ground) helps parties come to and agreement. In Congress debates (formal arguments) are used to bring out the sides of an issue. Legislatures often use committees to assist members in learning about an issue or topic. The Seniority System gives more power to those in Congress that have been there the longest. Committees include: standing committees that are permanent, joint committees that have representation from both the House and the Senate, and conference committees that have member of both houses that come together to work out differences between bills in order to send one bill to the President. The President can sign a bill into law or he can veto the bill in 2 ways: sign a veto resolution, or pocket veto the bill by not taking any action while the Congress is out of session. Governors can often use what is called a line-item veto where he/she can reject a part of the bill and sign the remaining portion into law. 5.02, 5.03 The American Judicial System The courts system is based on jurisdictions meaning that different courts have the power to hear different cases. Jurisdictions; Original jurisdiction – which court hears the case first. Appellate jurisdiction – which appeals court hears the appeals from lower courts. Concurrent jurisdiction – when more than one court can hear a case. Exclusive jurisdiction – when only one kind of court can hear a case. Types of courts: Federal courts - cases that involve the US government General trial courts where most federal cases start. Courts of appeal the first court to hear an appeal from the general trial court. The United States Supreme Court is the last court of appeal.(judicial review) Federal judges are appointed by the President and confirmed by the Senate State courts – cases within the states ( most cases in the country) General trial courts (lower courts) hearing misdemeanors (small crimes); felonies (major crimes) Appellate courts (the middle court of appeals from the lower courts State Supreme Court is the highest court of appeals within the state. State judges may be elected or appointed. Courtroom vocabulary: Complaint – accusing a person of wrongdoing Prosecutor - represents the government (state). Defendant – person charged with a crime Warrant – allows police to search and seize property Arrest Warrant – allows police to arrest someone Summons – a notice to appear in court Subpoena – requires a person to appear and testify in court Brief – a summary of the facts Plea – defendants statement of guilt or innocence. Public defender – a no cost attorney for a defendant Perjury – lying under oath Indictment – a charge that sends a case to trial Grand Jury – hears evidence for indictments Verdict – a judgment of guilt or innocence Sentence – punishment Plea bargaining – deal in which the defendant pleads to a lesser charge. Capital offense – a crime punishable by death From the appeals level: Writ of Certiorari – request of court documents from a lower court. Majority Opinion – decides the case Dissenting Opinion – view of the minority Concurring Opinion – view from a judge that votes with the majority, but for a different reason. 5.05 Local Governments Towns or cities. Both operate on a budget. County governments run courts, libraries, schools, hospitals, and elections. Cities provide streets, drainage, parks, police and fire departments, transportation, and zoning. Annexation is the legal merging of one territory into another one (used by cities to expand their control). 5.06 Public Policy Citizens can affect public policy by: voting, local initiatives (started usually by signing a petition), referendums that approve measures passed by legislatures (in NC, the lottery), and recall elections that remove an elected official from office (in CA, Gov. Gray Davis lost his job to Arnold Schwartzenegger). There are special interest groups that care about single issues concerning public policy: American Association of Retired Persons (AARP), National Organization of Women (NOW), trade unions, small business owners, and others. Governments get money to fund special needs through the sale of bonds. Those bond sales must be approved by the voters. Goal 6 The American Legal System 6.01 Development of Our Legal System A legal code spells out the laws and the way the law is administered. Laws go back to the Ten Commandments and the Code of Hammurabi which set down in writing the punishments for breaking the laws. Romans set forth laws that lasted for a long time and are the basis of our laws of today. England was the source of most American laws. The Magna Carta limited the power of the king and the English Bill of Rights that the king can not make laws without the consent of Parliament. It is through British common law (laws based on custom and precedent) that we have our US laws of today. There were laws in America before the pilgrims arrived. The Indians developed laws known as the Iroquois Confederacy. The first representative government was known as the House of Burgesses in VA. The first document ruling Plymouth Colony was the Mayflower Compact. The Declaration of Independence declared the 13 colonies free of British rule. And, the Constitution is the supreme law of the United States. 6.02 Types of Laws Common law – laws based on custom, traditions, and precedents. Statutory laws – laws created by the government in order to respond to different social needs. Constitutional law – laws spelled out in the founding documents (the Constitution). Criminal laws – penal laws that punish criminals for committing crimes against the state or people. Civil laws – laws that regulate relationships between people and organizations. Administrative law – the regulations and rules set down for the government. International law – rules covering the relationships between countries or nations. 6.03, 6.07 Law Enforcement The government must enforce laws to protect the people. In the federal government the Department of Justice (DOJ) enforces federal laws. The Federal Bureau of Investigation (FBI) is the federal police force. The United States Secret Service protects the President and other high ranking government officials. The National Guard is the military wing of the federal government. In cities we have police, in counties we have the sheriff’s office to enforce the laws. 6.04, 6.05 Knowing the Law An informed citizenry is a necessity and a responsibility of the citizens is to know the law. “Ignorance of the law is no excuse”. Citizens should know the laws that affect them. Citizens can learn the law through: town meetings, public hearings, mass media (TV and radio). 6.06 Lobbying Lobbying is the act of interest groups trying to impact the government. Lobbyists represent special interest groups and try to persuade legislators to pass laws beneficial to their clients. There are lobbyists in Washington and Raleigh representing doctors, lawyers, farmers, businesses, unions, churches, environmentalists, teachers, women, minorities, and hundreds of other special interest groups. In addition to lobbyists are think tanks that study problems and offer solutions to the government. 6.08 Addressing Criminal Behavior All governments try to reduce crime. Punishment of criminals is justified in 3 ways: retribution – criminals deserve to be punished because they inflicted harm on another, deterrence – criminals and others will see the punishment and try to avoid having that punishment put on them, and rehabilitation – criminals can be educated and trained while in prison to be productive citizens. There are 2 types of punishments: incarceration (locked up) and monetary compensation (a payment of money or the return of property) the 1990s “3 Strikes” law was enacted and said that on the In third conviction for a person that person will receive extra time in prison up to life in prison. Parole offers prisoners a release into a supervised program until his/her sentence is finished. Probation gives those convicted of a crime a return to the community with a lot of rules. Suspension takes away a privilege such as a driver’s license. Detention allows the state to hold people in boot camps for rehabilitation. Capital punishment is the death penalty an prisoners are held on Death Row until the execution. Goal 7 Economics Economics is a social science. It studies how societies choose to use limited resources to satisfy their unlimited wants and needs. 7.01 Production The 3 basic economic questions: what should we produce, how should we produce it, and for whom should we produce it? There a 4 factors in production that answer the 3 questions above: land, labor, capital, and entrepreneurship. Land – property and resources, Labor – workers, Capital – money, machinery, and buildings, Entepreneurship – human effort that brings the other 3 factors to work successfully. Resources necessary for production are either renewable (things that can be replaced like trees) and nonrenewable (things that can not be replaced like minerals and oil). Productivity is the efficient use of production. The factory that can make the most items for the same amount of investment is more productive than the one that makes fewer items. The higher the productivity the higher standard of living of the society. 7.02 Scarcity Production creates goods that people own (cars, houses, phones) while services are things that people use (internet, fast food, hotels). Producers make goods and services that people use to satisfy their wants and needs. People have limited resources (income or wealth) which causes them to make decisions about using those resources. If you spend you can not save. People are forced to make decisions (economic choices) because our wants and needs are greater than our resources (money). Price measures the value of a good or service. Wages (per hour pay) and salaries (per year pay) are the price of labor for the employer. There is a decision making model: recognition of a want or need ---- information search----evaluation of alternatives----the purchase----post purchase evaluation. The smaller the purchases some of steps can be eliminated. Not all costs are private. Some costs are for society ----too many cars causes pollution for society. 7.03, 7.04 Economic Factors Economic choices involve tradeoffs (opportunity costs). If you purchase too many expensive meals you probably won’t have money for the down payment for a house. Prices are set by balancing production with consumption. Supply and Demand. Incentives are encouragements by businesses to buy a product (frequent flyer miles, and no payments till next year). Wants are our desires and needs are our necessities. Types of business costs: Fixed costs – rarely change like rent over the year, Variable costs – changing costs that move because of changing levels of production (salaries, wages, and overtime), Total costs – adding fixed and variable costs together, and Marginal costs – the cost of making more items than originally planned. Division of labor is breaking a task into several specifics tasks for maximum productivity. These tasks require specialization and skills to do a specific job in production. The assembly line uses division of labor and specialization. Division of labor allows mass production to happen. Human capital are the skills and abilities of the workers. Innovation is the creation of new inventions and technologies used to make a business successful. White collar workers refers to office work and blue collar workers refer to the workers out in the plant. Agribusiness is mass production in farming. 7.05 Investment Investment puts money to work to make more money. Investment is the chief factor for economic growth. Inputs are the factors of production, and output is the product or service produced. If it take too much input to make one more item then you have a diminishing return on your investment. It was better to make one item less. Consumer goods are used by the public and capital goods are used to further production. 7.06 Economic Systems Traditional economies (mostly agricultural) rely on tradition, customs, and habits. The market is the place where buyers and sellers come together. In a market economy the government allows the buyers and sellers to regulate production and exchange. Capitalism – people have the right to own property, and people have a right to make a profit for their work. Profit is the income left after the bills are paid. Consumer sovereignty – choices made by consumers decide the profits of the producers and which businesses are going to succeed and which are going to fail. Laissez-faire economics allows that the government lets the people make free choices with out governmental interference. Communism – the government makes all of the decisions concerning production. Socialism – combines communism and capitalism in a mixed economy. Fiscal policy – government spending and taxing. Deficit spending – spending exceeds revenues (taxes). Goal 8 The United States Economy 8.01, 8.02 Comparing Economic Systems Traditional , market, command, and mixed economies. (See 7.06) Another name for market economy is free enterprise. Private property can be land, buildings, tools, and vehicles, but private property can also be patents ( a license for exclusive use of product or method of doing something) or copyrights (a license for creative ideas like music, books, art). There are 3 goals of free enterprise 1. people can/will buy and sell what they want (voluntary exchange) 2. full employment (almost everyone has a job – some people will always be looking for a job 3. businesses can make as much profit as possible. Profit is often based on: efficiency (the cost of making each item of production) and productivity (how much productions there is per employee). Production can be done where: each worker makes a product from start to finish or each worker has a specific task to do (division of labor/specialization). Businesses buy two factors of production: labor (workers) and capital (money to buy the machines). Households provide those two factors: workers and investments used capital. The price of labor is wages or salaries. The price of capital is interest (rent paid for the use of money). A product market supplies goods and services for sale to households. The circular flow of economic activity traces the flow of money to households as wages and return of the wages to the businesses in purchase Law of Demand - when the price goes up demand goes down. Law of Supply – when the price goes up the quantity of the product goes up. The Law of Supply and Demand – price will keep changing until supply and demand are equal (this is called the equilibrium price) Products have complementary products (items that go together) and substitute products (items that can replace each other). Supply side economics says that the government should cut taxes on businesses to increase productivity. This supply side theory holds that when owners have more money they will invest in their business by hiring more workers who will have more money to spend generating more profits which will generate more taxes. Demand can be graphed on a demand curve. The amount of money left after paying for necessities is called disposable income. Influence on prices: consumer taste (what consumers want), surplus (more supply than needed), controls set by the government, interest rates. Inflation is when prices go up without any change in supply or demand. Deflation is when prices fall without any change in supply or demand. The market is where goods and services are bought and sold. Buyers decide how much of a product is bought and sellers who decide much of a product is supplied. Buyers tell how much they are willing to pay for a product, and sellers tell how much they are willing to accept for the product. In a competitive market a business makes as much of a product it can before it starts to lose money. Businesses try to make a profit. When a business is the only producer of a product and there is no substitute for that product that business becomes a monopoly. A monopoly a business can set the price and supply wherever it wants because there is no competition (Microsoft). Oligopoly is where a few businesses dominate the market (Coke and Pepsi). Businesses try to get advantages over other businesses by buying other firms (mergers). In a horizontal merger businesses try to buy up other businesses that make or offer the same product or service. In a vertical merger businesses try to buy up a different part of the same product or service. In a conglomerate businesses buy up other companies that are totally unrelated. There are 4 types of business organizations: sole proprietorship – one owner who makes all of the decisions and takes all of the responsibilities, partnerships – shared decisions, but each partner remains fully responsible, limited liability partnerships – shared decisions, but limited responsibilities, and corporations – formed by a legal charter where people buy stock in the company and share in the profits of the company. Types of Businesses Type Life of Business Liability of owners Sole Proprietorship Limited to life of owner Unlimited to owner (Individual) Partnership Limited to life of either owner Unlimited to each owner Corporation Unlimited life Limited for each stockholder Labor Workers gather together in unions to promote higher wages and better working conditions through a process called collective bargaining. Unions can fight management through strikes, and boycotts. Owners can fight unions by using lockouts. When negotiations fail two methods may help arrive at a decision: Arbitration is where both parties tell their side to an arbitrator who renders a binding decision. In mediation the parties meet and a mediator help them reach a decision. Barter is trading one item for another without using money. Money is used for three functions: 1. a medium of exchange 2. a unit of measure 3. store of value Financial institutions can take several forms: Banks – commercial and mutual that make money by loaning money to people and businesses Savings and Loans – make loans to people to by homes and businesses Credit unions – offer banking services to members FDIC is the Federal Deposit Insurance Corporation that insures deposits of individual up to $100,000. Monetary policy is the regulation of money by the government. The Federal Reserve Bank can put more money into circulation by lowering interest rates which allows people and businesses to borrow money a t a cheaper rate. By the same method the Fed can take money out of circulation by hiking the interest rate which makes it harder to get loans. The federal government can manage its taxation and spending to insure economic growth through fiscal policy. Household can invest in insurance against future problems: life insurance, medical insurance, auto insurance, property insurance, disability insurance, and travel insurance. Goal 9 Factors in US Economy 9.01 , 9.04 The Business Cycle The long term pattern changes in our economy are called the business cycle. The four stages of this cycle are; Expansion – an economy that is growing, Prosperity – an economy that is healthy, Contraction – an economy that is declining, and Recession –an economy that continues to decline for 6 months. Then the cycle will start over. GDP – is the measure of all goods and services produced in a year. The standard of living for a country or a person is measured by: Income, Education, Debt. The Department of Homeland Security is responsible for protecting America from terrorism. In NC businesses have been hurt by: downsizing – cutting workers to cut costs and improve profits, and by outsourcing – sending a part of the business overseas so that they can use cheaper labor which will cut costs and improve profits. 9.02, 9.03 Economic Influences Most industries and businesses regulate themselves, but sometimes the government gets involved. The government tries to protect the public (consumers) and protect the environment. The EPA – the Environmental Protection Agency is charged with saving the environment. The government also gets involved in labor disputes between unions and management. The government also fights discrimination through affirmative action laws. Regulation is the government getting involved in businesses, and deregulation is the government getting out of the way of businesses. The population of America is moving from the Northeast and Midwest to the South and Southwest. This is due to jobs, climate, and affordable property. Immigration has also brought many more people the South and Southwest from Latin America. Production no longer dominates the American economy like it once did. Today, the service economy provides more jobs than production jobs. 9.05, 9.06 Domestic and International Economies Global interdependence is the relationship of different countries of the world that depend on each other for goods and services. International trade is the exchange of goods between countries of the world. Countries want a favorable trade balance (exports are greater than imports) to increase their economy. An unfavorable trade balance exists when imports exceed exports causing American money to leave the country. Tariffs are taxes on imports. Protective tariffs protect American industry by making the cost of imported goods go up. The exchange rate is the price one currency can be exchanged for the currency of another country. NAFTA is the North American Free Trade Agreement which ends trade barriers between the US, Mexico, and Canada. WTO, the World Trade Organization sets the rules for trade between countries. The IMF, International Monetary Fund, monitors world finances and encourages countries to work together. The World Bank is an international banking organization that helps poorer countries by making low interest loans to those countries to help them escape poverty. Developed countries like the US have high standards of living (high GDP, high incomes). Developing countries have low GDP, low incomes and therefore low standard of living. Free trade refers to the unrestricted flow of goods between countries. Foreign aid is giving money and capital goods to poor countries to help them recover. Problems exist in world trade like: child labor and human rights. 9.07 US Fiscal and Monetary Policy The government tries to help the economy through monetary policy and fiscal policy. Loose money means that there is plenty of money to borrow and interest rates drop. Tight money means there is less money to borrow and interest rates go up to discourage borrowing. Interest rate is price paid to borrow money for a period of time. People and businesses borrow from banks. The discount rate is the interest rate paid by banks to borrow money from the Federal Reserve Bank of the government. Fiscal policy determines have the government raises and spends money. Fiscal policy tries to stabilize economic growth through taxes and government spending. Taxes include: income taxes (progressive in that the more you make the higher your rate), excise taxes, and sales taxes. 9.08 Individual Economic Activity People should base their personal spending decisions on economic conditions. When prices go up for most goods over a period of time we call it inflation. The stock market goes up (a bull market) and goes down (a bear market). OPEC is the Organization of Petroleum Exporting Countries (Iran, Saudi Arabia, Venezuela). Zoning is a system of regulating land use by mapping out zones for residential, commercial, and industrial. Building code are rules for construction that insure that the buildings are safe to use. Goal 10 Personal Responsibilities 10.1, 10.04 Civic Responsibility (see 4.08) 10.02 Diversity in America America is a nation of immigrants, so we face many questions about unity and diversity. Assimilation is the process of making different groups a part of a larger group. The US is called a “melting pot” because we have so many groups in America. Diversity is taking America from one mainstream culture into sub- cultures based on ethnicity. Diversity is also called multiculturalism. Some believe that diversity makes America stronger. For diversity to work people must be tolerant toward people of different races, religions, and languages. Discrimination takes several forms: religion, gender, sexual orientation, race, weight, intelligence, socio-economics, and age. 10.03 Self-Reliance America and Americans are typically self reliant. They take care of themselves and prefer to depend on no one for assistance. 10.05 Conflict and Resolution (see 4.09) 10.06 Consequences of Freedom Freedom means people can and do make choices about their lives. Free citizens can choose their own leaders. Free citizens can make economic choices. Free citizens can move up or down the socioeconomic ladder as they choose to work. Freedom comes with accountability and responsibility. GOOD LUCK !