BUS-X 100 Lecture Notes - Lecture 3: Economic System
• Macroeconomics – Today Macro is Global! Think Global!
• Microeconomics – A subection of Macroeconomics) – A piece of the total A Country (200) –A
Company – A State – A County – A City • USA - Cook Industries – Indiana - Monroe County -
Bloomington . 9 All Countries have different markets, political structures, & laws. Adds to
business complexity.
Economic Impact… No Single Actions Multiplier Effect Company closes plant in Bloomington.
1800 workers lose jobs. People who lost jobs reduce spending. Local hardware store has to close,
20 More people lose jobs due to reduced spending on hardware. Local restaurant has to reduce
staff by 4 due to reduced spending on eating out.
Mixed Economies: No country practices pure capitalism or pure socialism/communism.
Economic systems contain various elements of government intervention.
Capitalism* Individuals own & operate all businesses. Competition is open. Wide choice of
products Prices set by supply & demand. Private profit. Freedom to choose career. Socialism
State owns major industries supported by individual owned small business.
Competition restricted in major businesses & encouraged in small businesses. Some choices in
products & prices set by supply & demand…Small. Profit to individuals & government. Many
people work in government jobs….Wealth.
Communism Government owned businesses. No competition. Limited product choice, and
usually high relative prices. Allotment of some products. Profits go to government… Wealth.
Careers assigned.
•Inflation – condition characterized by continuing rise in prices. ( stated in %) (high inflation drives
higher costs & internal focus)?
•Recession – decline in production, employment, & income. (economic contraction) (rising
unemployment, declining spending & declining interest rates)
find more resources at oneclass.com
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Document Summary
Think global: microeconomics a subection of macroeconomics) a piece of the total a country (200) a. Company a state a county a city usa - cook industries indiana - monroe county - 9 all countries have different markets, political structures, & laws. Economic impact no single actions multiplier effect company closes plant in bloomington. 20 more people lose jobs due to reduced spending on hardware. Local restaurant has to reduce staff by 4 due to reduced spending on eating out. Mixed economies: no country practices pure capitalism or pure socialism/communism. Economic systems contain various elements of government intervention. Wide choice of products prices set by supply & demand. State owns major industries supported by individual owned small business. Competition restricted in major businesses & encouraged in small businesses. Some choices in products & prices set by supply & demand small. Limited product choice, and usually high relative prices.
