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Chapter 02 - Understanding Economics and How It Affects Business
1. President George Bush basically followed the
basic economic principles of free markets.
recession.
G. USING MONETARY POLICY TO KEEP THE ECON-
OMY GROWING
2-42
PPT 2-57
What Can a ____ Dollars Buy
(See complete PowerPoint slide notes on page 2.63.)
PPT 2-58
Monetary Policy
(See complete PowerPoint slide notes on page 2.64.)
lecture link 2-10
CONTROLLING YOUR
PERSONAL MONEY SUPPLY
Controlling your personal money supply is harder than you
may think. (See the complete lecture link on page 2.71 of this
manual.)
Chapter 02 - Understanding Economics and How It Affects Business
2-43
progress
assessment
(Text page 52)
PPT 2-59
Progress Assessment
(See complete PowerPoint slide notes on page 2.64.)
VII. SUMMARY
Chapter 02 - Understanding Economics and How It Affects Business
2-44
PowerPoint slide notes
PPT 2-1
Chapter Title
PPT 2-2
Learning Goals
PPT 2-3
Learning Goals
Chapter 02 - Understanding Economics and How It Affects Business
2-45
PPT 2-4
John Maynard Keynes
PPT 2-5
Name That Company
Organization: Foundation for International Community As-
sistance (FINCA)
PPT 2-6
The Major Branches of Economics
This slide gives students insight into the definition of eco-
nomics. When going over this definition it often helps to fur-
ther define the term resources. The term resources ties back
into Chapter 1 and the factors of production: land, labor, capi-
tal, knowledge and entrepreneurship.
Chapter 02 - Understanding Economics and How It Affects Business
PPT 2-7
Resource Development
Businesses can contribute to an economic system by invent-
ing new products that increase the availability of resources.
PPT 2-8
Examples of Ways to Increase
Resources
PPT 2-9
Thomas Malthus and the Dismal
Science
Thomas Malthus believed that if people were left to their
own devices there would be chaos; therefore the government
needed to be heavily involved in controlling the economy. Mal-
thus’ ideas are still with us. Neo-Malthusian ideas of overpopu-
lation are prevalent in books such as Paul Ehrlich’s The Popu-
lation Bomb which contains ideas similar to those presented by
Thomas Malthus 200 years ago.
2-47
PPT 2-10
Population as a Resource
Malthus viewed a large population as a negative. However,
many economists today see a highly educated population as a
valuable, scarce resource. Countries like Japan and Germany
are examples of nations that have become economically suc-
cessful due to large well-educated populations producing so-
phisticated high-value products.
PPT 2-11
Bringing in the Green with Green
Products
PPT 2-12
Adam Smith the Father of
Economics
Adam Smith’s ideas were laid out in his seminal book, An
Inquiry into the Nature and Causes of the Wealth of Nations.
Smith believed strongly in more “natural liberty” and less gov-
ernment intervention into the economy {an idea that was an
anathema to Malthus}. Smith argued that allowing people the
freedom to own land and the right to keep profit would not cre-
ate chaos as Malthus had argued, but rather would create great-
er resources for all.
Chapter 02 - Understanding Economics and How It Affects Business
2-48
PPT 2-13
The Invisible Hand Theory
The invisible hand was at the heart of Adam Smith’s theory
describing the process of turning self-directed gain into social
and economic benefits for all.
PPT 2-14
Understanding the Invisible Hand
Theory
PPT 2-15
Corruption’s Effect on the Economy
Chapter 02 - Understanding Economics and How It Affects Business
Chapter 02 - Understanding Economics and How It Affects Business
PPT 2-19
A Small Loan Can Make a Big
Difference
PPT 2-20
Capitalism’s Four Basic Rights
The four basic rights under a capitalist system are straight-
forward, but which of the four basic rights has been weakened
in the United States over the past 30 years? When asked this
question, rarely do students touch on the concept of eminent
domain and the weakening of the right to own private property
due to the Kelo vs. New London Supreme Court case from
2005. If time permits students can explore this case and the po-
tential impact the case may have on America capitalism.
PPT 2-21
Roosevelt’s Four Additional Rights
2-52
PPT 2-24
Pricing
Prices are determined by consumers negotiating with the
sellers.
PPT 2-25
Supply Curves
PPT 2-26
Demand Curves
Chapter 02 - Understanding Economics and How It Affects Business
PPT 2-27
Equilibrium
PPT 2-28
Four Degrees of Competition
PPT 2-29
Free Market Benefits and
Limitations
2-60
PPT 2-46
U.S. Unemployment Rate
The unemployment rate in the United States over the past 50
plus years has been as low as 3.9 percent, but more recently has
climbed past 10 percent. Although the unemployment rate is
climbing in the United States, it still has a long way to go to
reach the unemployment rate in Zimbabwe (80 percent).
PPT 2-47
Best and Worst Cities for a Job
Search
PPT 2-48
Inflation
When discussing inflation, disinflation, deflation and stagfla-
tion, introducing the term hyperinflation is particularly interest-
ing to students. Historical examples of countries suffering from
hyperinflation post-World War I and currently Zimbabwe bring
this topic to life.
