role of money

1.  Using what you learned about the three functions of money, explain how 'play money' differs from 'real' money? Real money is a medium of exchange, unit of account, and a store of value. Play money has none of these characteristics.

2.  Money has no actual value other than the value we attach to it. The barter system would still be practiced today if the participants did not agree to set a value on a piece of printed paper that represented the value of the goods and services they had to offer.  What would you accept in place of money, if someone wanted to 'buy' your most prized material possession? I would accept anything that would appreciate in value and not depreciate.

Circular Flow Model - M11

1.  What does a circular flow model tell us? What the circular flow model tells us is that three basic elements of the economy will work and interact together to ensure that our needs and wants are provided for.


2.  What is the role of households in the three sector circular flow model? Households provide businesses with payments in exchange for jobs and goods and services. They also pay taxes to the government and hold the four factors of production.

3.  What is the role of businesses in the three sector circular flow model? Businesses provide income, goods, and services to households. They also pay taxes, supply goods and services to the government.


4.  What is the role of government in the three sector circular flow model? The government supplies services to houses and income. They also give services and payments to businesses.


5.  What role do households have in the factors or resource market (inputs)? They own the four factors of production.

Title:  Law of Demand and Law of Supply - M12

1.  For each event described below, explain what happens to either the demand or supply curve. (increase/decrease?  Shifts left or right?)

(a) What happens to the demand for chicken if concerns about mad cow disease lead to widespread euthanizing of  cows on U.S. cattle farms? The demand for chicken rises because it is a good substitute for beef and cows are becoming less and less.



(b) What happens to the supply of orange juice if Florida is hit with very severe weather? The supply for orange juice will decrease because there would be no oranges to make the juice.


(c) In the market for coffee, severe global weather systems destroy 30% of the coffee bean crop. Supply will decrease


(d) In the market for cereal, if the price of cardboard material used to package cereal increases. The supply will decrease unless consumers are willing to pay more money for that cereal.


2. For each part below,  EXPLAIN what happens to equilibrium quantity and price(increase or decrease?).

a)  In the market for doughnuts, if they were found to be a major contributor to high cholesterol in adults. Demand and supply will drop resulting in a new equilibrium price.


b)  In the market for doughnuts, if widespread unemployment continues. A shift in supply to the left because less doughnuts will be produced and the price will drop on them.


c) In the market for doughnuts, if Krispy Kreme introduces a new whole wheat 'low-calorie' doughnut. The demand and supply curve will shift to the right resulting in a higher equilibrium price.


3.  What are two factors that can change the quantity demanded?  Provide an example for each. Buyer’s income change, consumer preferences change.


4.  What are two factors that can change the quantity supplied.  Provide an example for each. Number of buyers goes up or down, more suppliers enter the market

The role of the government

1.  How are the economic goals of freedom, security, efficiency, equity, stability, and economic growth achieved in a market economy? Freedom is the freedom of the marketplace; security is enhanced by individual efforts, such as saving and the purchase of insurance, as well as by the growth of the economy; efficiency possesses productive efficiency in producing goods; equity can be described as the application of our concepts of what is fair and what is unfair; stability is absence of inflation or deflation, not the absence of changes in relative prices in particular markets; economic growth producing increasing amounts of goods and services over the long term.

2.  Why has the role of government in the economy increased dramatically since the 1880s? During the 19th century, governments played a central and pervasive role both in establishing the economic and institutional conditions necessary for the occurrence of the Industrial Revolution and for promoting its spread to the follower European nations. Everywhere, governments reduced the risks of private transactions by promulgating laws that limited entrepreneurial liability, increasing the security of property rights, and enforcing private contracts.

3.  Write an argument that supports or opposes the statement in the visual below that says, "deregulation won't work because people are greedy”?

4.  Explain why the government provides public goods and services.  Why are these public goods and services NOT provided by the private sector?  (Please include a discussion on non-rivalries and non-excludable goods) The government provides public good and services because they have to be non-rivalrous and non- excludable so that everyone can have access to these goods. If private sectors provided these goods, they would not be non-rivalrous and non-excludable.


5.  What are the 6 functions of government in a market economy (provide an example of how the government fulfills each of these 6 functions)? The six functions of government in a market economy are freedom, security, efficiency, stability, equity, and economic growth. Freedom is achieved by the people having the freedom to work (or not), freedom to produce, trade and consume any goods and services acquired without the use of force, fraud or theft. Security is achieved by having stable income or other resources to support a standard of living now and in the foreseen future. Efficiency is achieved by production proceeding at the lowest possible per-unit cost. Stability is achieved by the absence of excessive fluctuations in the economy, an example is high employment. Economic growth is achieved when a nation’s wealth increases over time.
6. Describe the relationship that inputs and outputs have on productivity? The Inputs and Outputs show how much of a product is imported, when products are imported and exported thought out the country they increase productivity.

7.  How do investments in capital goods, technology, human capital, training, and educating workers, improve productivity and economic growth? You invest into capital goods, technology, human capital, training, and educating workers that improves productivity because smarter workers find ways to complete more work in less time. Human capital and technology increases productivity because they aid the workers so that more work can be completed.

8.  Refer to the chart below and explain the cause of the decrease in the output, productivity, and employment in manufacturing in the United States.  What can the United States do to reverse this downward trend in manufacturing? Deregulations has more ups than downs. In this chart, the effect of not having the government involved is exemplified.

Reflection:  What are two questions that you still have about these particular standards? What way would market economy be useful?  How do inputs and outputs show scarcity?

How different economic systems answer the three basic economic question

1. What are the three basic economic questions that every society (economic system) must answer?

What to produce? How to produce?Who gets the good and services produced?

2. What is an economic system? What are the four types of economic systems and how does each answer the three basic economic questions? Give one example of each.

An economic system is the method used by a society to produce and distribute goods and services.The four types of economice systems are Market economy, Mixed economy, Planned economy, and Traditional economy.
3. While the United States is largely a market economy, how does it also reflect a combination of economic systems. It reflects a combination of economic system because the government is very envolved in the system.

4. The Inuit tribe in Alaska teach their children that they must always do their best at every task. The child begins by observing the adults working on a task. When the time comes for the child to do the task, the task is first divided into smaller tasks. The adults praise the child at each stage the child successfully completes.  When all stages have been complete, the child is ready takes full responsibility for the task.  What economic system is used by the Inuit? Explain. The inuits uses the traditional economy because they teach thier children a task and it becomes a habit to them.

5. How do market, command and traditional economics systems compare and contrast with each other in terms of profit motive, private ownership, consumer sovereignty, competition and government regulation? They compare because all of the economies have something to do with goods and services.They contrast because they all have there own meaning uses different ways of production.

6.Explain why Adam Smith would oppose government intervention in a market economy.  Give a specific example of why you support Adam Smith’s theories of laissez faire and the ‘invisible hand’ in a market economy and one example of why you would oppose his theory? Explain. sI do not support his theory because i believe that the government should be invovled in the economy because they makes sure things are running smooth and make sure that the company's are selling safe products.

How does the market economy influence the government ?

Why doesnt Adam Smith want the government to be apart of the economy