Common Core Basics

CHAPTER 5

As a child, you might have traded something you had for something a friend had. Each of you probably believed that the thing you gained was worth more than what you gave away. Both of you thought you were better off because of the trade.

In this chapter, you will learn how goods and services are bartered or sold and how economic systems are formed. As you read, consider how your daily economic choices impact the greater economy.

In this chapter you will study these topics:

  • arrow_drop_downBasic Economic Concepts

    In any economic system, limited resources force people to make choices. People cannot have everything they want. The study of economics helps us analyze the best way to use our limited resources.

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  • arrow_drop_downThe Role of the Market

    A market is anywhere a buyer and a seller freely choose to exchange one thing for another. The laws of supply and demand help companies figure out how many goods to make and how much to charge for them.

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  • arrow_drop_downThe Role of Government

    Until the 1930s, government had little role in the economy. This changed during the Great Depression when the government provided jobs for millions of unemployed workers and developed the Social Security system. Taxation pays for government programs.

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  • arrow_drop_downMoney and Financial Institutions

    Money is used as a medium of exchange, as a standard of value, and as a way to store value. Today US banks insure the money deposited in their accounts. The country's central bank is the Federal Reserve.

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  • arrow_drop_downMonopoly and Competition

    In a monopoly, one seller controls the market for a particular good or service. When there are many sellers providing similar goods or services, there is competition. Competition often leads to innovation.

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  • arrow_drop_downProfit

    To make a profit, a company must consider the factors of production (land, labor, and capital). It must also be concerned about incentive and morale.

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  • arrow_drop_downProductivity and Interdependence

    For a company to be productive, it must operate efficiently. Its profits are influenced by the cost of its supplies and by the price customers are willing to pay. This interdependence has increased due to technologies like computers and the Internet.

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  • arrow_drop_downFiscal and Monetary Policy

    The federal government plays two important roles in the US economy. First, it makes decisions about collecting and spending money (fiscal policy). Second, through the Federal Reserve System, it controls the money supply and interest rates (monetary policy).

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  • arrow_drop_downCredit, Savings, and Banking

    Various economic tools allow individuals to manage their money. These include checking accounts, savings accounts, and credit cards.

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