The American People

Legal Rights and ResponsibilitiesGood LawsEqual justice under lawEqual treatmentReasonableUnderstandableEnforceableCode of HammurabiKing of BabyloniaCompiled a set of laws (1760 BC)First known written lawConsidered very harsh

Ten CommandmentsHebrew Bible (1200 BC)Thou shalt not

Legal Rights and ResponsibilitiesRoman LawPublished in 450 BCPenalties considered harshMany laws adopted by the Roman SenateRoman judges wrote opinions on lawsSpread as the empire grewJustinian I Eastern Roman Empire (533 AD)Justinian Code condensed Roman Law English LawCommon law Precedent Based on earlier court decisionsStatutesActs passed by ParliamentSettlers brought tradition to English Colonies

Legal Rights and ResponsibilitiesCriminal LawProhibit people from deliberately harming each other or each others propertyFeloniesMurder, rape, arson, and other serious crimesConviction usually mean prison timeMisdemeanorsVandalism, stealing inexpensive itemsConviction may mean fines or jail sentence of less than one yearCrimes against propertyMost common type of crimeLarceny -stealing property with the intent of never returningRobbery taking property from a person using force or threatsBurglary unlawful entry into any building or structure to commit a crime

Legal Rights and ResponsibilitiesCivil LawLawsuitPerson or group sues to collect damages because they have been harmedDisputes between peopleTort LawCivil wrongsPersonal injury,Family LawDivorce, child custody, adoption, alimony, child supportConstitutional LawDeals with the formation, construction, and interpretation of constitutionsAdministrative LawDeals with rules and regulations the executive branch makes to carry out its jobStatutory LawDeals with the statutes or laws passed by legislatures

Legal Rights and ResponsibilitiesThe Constitution of the United States establishes and protects the individuals fundamental rights and libertiesCourts base their rulings on written law and Precedents of earlier casesRulings are used to build decisions about similar cases in the futureStare decisis let the decision standConstitutional GuaranteesWrit of habeas corpusRequires officials who have made arrests to appear in court with the accused and explain why the accused is being heldSafeguard against being kept in jail unlawfullyForbids bills of attainderPunishment without a trial or fair hearingForbids ex post facto lawsWould allow punishment for an act that was legal, but has become illegal

Legal Rights and ResponsibilitiesDue process of law5th and 14th AmendmentsGovernment is not allowed to take lives, liberty, or propertyExcept according to the proper exercise of law

4th AmendmentProtection against unreasonable search and seizureSearch warrantSpecify the exact place to be searched and any property to be seized

Legal Rights and Responsibilities5th AmendmentSelf incrimination Double jeopardyTried for the same crime twiceGrand juryDoes the government have enough evidence to go to trial

6th AmendmentRight to a lawyerSpeedy and public trail by impartial juryPlea bargain Negotiation between defense attorney and the prosecutor

Legal Rights and Responsibilities8th AmendmentNo cruel and unusual punishmentsNo Excessive bailBail is set based on the seriousness of the case

Economic ChoicesNeedsWantsMicroeconomicsMacroeconomicsEconomic modelA theory that tries to explain human economic behaviorScarcityWhat to make, how to make, who gets what is produced?ResourcesThings used in making goods and providing servicesChoices and CostsTrade offThe alternative you face if you decide to do one thing instead of anotherOpportunity costThe cost of the next best use of your time or money when you do one thing rather than anotherCostsFixed CostsAre the same no matter how many items you produceMortgage payments and property taxesVariable CostsChange with the number of items producedWages and raw materialsTotal CostsFixed cost plus variable costMarginal CostsThe additional cost of producing one additional unit

RevenueTotal RevenueNumber of units sold multiplied by the average price per unit42 units at 2 dollars each42 x 2 = $84Marginal RevenueThe change in total revenue that results from selling one more unitMarginal benefitsThe satisfaction received when one more unit is producedCost-Benefit AnalysisIf costs outweigh the benefits then we should reject the choice

GoodsServicesFactors of productionResources necessary to produce goods and servicesLand/Natural ResourcesSurface land and water, fish, animals, forest, and mineral depositsLaborWorkforce, anyone who works to produce good and servicesCapitalManufactured goods used to make other goods and servicesMachines, buildings and toolsCapital goods are the result of earlier production, satisfy wants indirectly by aiding productionEntrepreneursAn individual who starts a new business, introduces new products, and improves processes

Gross Domestic ProductGross Domestic Product (GDP)The value in dollars of the final goods and services produced in a country in one yearLoaf of bread sold to consumer is a final goodFlour, wheat, milk that when into the loaf are not counted un GDPSale of used goods are not counted in GDPNo new production is generatedHow is GDP measured?Total number of goods multiplied by priceGDP is used determine how an economy is doingGDP is an indicator of Standard of livingthe quality of life based on possessions of necessities and luxuries

Circular FlowCircular FlowEconomic growthGrowth occurs when total output of goods and services from all economic areas increasesProductivityMeasure of output produced by a given level of inputsHow many goods and services are made using a certain amount of land, labor, capital and entrepreneurshipSpecializationPeople, businesses, regions, or countries concentrate on goods or services that they can produce better than anybodyImproves productivityConsumers depend on many different producersCapitalismBased on free markets and private ownershipEconomic system where private citizens own and use the factors of production in order to seek a profitFree enterpriseCompetition is allowed to flourish with little interference from governmentEconomic freedomCompetitionThe struggle between buyers and sellers to get the best products at the lowest priceEfficient production, higher quality products and more satisfied customersProfit MotiveThe driving force that encourages individuals and organizations to improve their material well being The risk and the potential reward that causes people to invest in a business ventureAdam SmithScottish philosopher wrote The Wealth of NationsIndividuals left alone would work for their own self interestGuided as if by an invisible handLaissez-faire economicsGovernment should not interfere in the market placeOnly actions of government is to ensure free competition

DemandWillingness and ability to buy a good or service Law of DemandQuantity demanded and price move in opposite directionsFactors Affecting DemandChanges in populationChanges in incomeChanges in tastesPopularityChanges in expectationsChanges in substitutesChanges in complementsGoods that are used togetherDemand for one good moves in the opposite direction as the price of the otherSupplyThe quantity of a good or service that producers are willing to sell at all possible pricesLaw of SupplySuppliers will normally offer more for sale at higher prices and less at lower pricesProfitThe money that is left over after a business pays all of its costProfit is the primary motive of businesses Cost of ResourcesProductivityShortageSurplusEquilibrium price

Types of BusinessSole proprietorshipA business operated by a sole or single personThe most common and simplest form of business in the USPartnershipsA business that two or more people ownArticles of PartnershipCorporationsMost complicated type of businessRecognized by lawCan own property, pay taxes, sue and be sued

Government and the EconomyPrivate goodsGoods and services consumed by one personPublic goodsCan be consumed by one person without preventing consumption by another personExternalityOne role of government is to prevent negative externalityOne role of government is to ensure competition in the economyMonopolyNatural Monopolies

Business CyclePhases of the business cycleExpansionThe economy is growingReal GDP is growingPeakPeriod of prosperity, new businesses open, factories at full capacityContractionGDP level off and begins to declineBusiness activity begins to slow downRecession real GDP goes down for six straight monthsTroughLowest point in business cycleReal GDP levels off and slowly begins to increase The economy goes through alternating periods of growth and declineBusiness cycles are measured from peak to peak

Fiscal PolicyChanges in government spending or tax policies to affect overall business activityInflationSustained increase in the general level of pricesConsumer Price Index CPI400 products commonly used by consumersChanges in average level defines the rate of inflation

MoneyFunctions of MoneyIs a medium of exchangeWe trade money for goods and servicesIs a store of valueWe can hold wealth in the form of money until we are ready to use itIs a measure of valueMoney serves as a measuring stick to assign value to a good or service

Federal Reserve SystemThe Central Bank of the United StatesIs the Federal Reserve System The FedMakes loans to banksRegulatorOversees and regulates large commercial banksGovernments BankHolds the governments moneySells U.S. government bonds and Treasury billsManages the nations currencyControls circulationMonetary Policy The controlling of the supply of money and the cost of borrowing money according to the needs of the economyInterest rateChanging the money supply changes the interest rateExpanding money supply pushing interest rate lowerReducing (tightening) the money supply moves interest rates higher Discount rateThe rate the Fed charges member banks for loansLow rates encourage banks to borrow money from the Fed that the banks then loan to their customers Reserve requirementsMember banks are required to keep a certain percentage of the money in Federal Reserve Banks as a reserve against deposits

Monetary PolicyOpen Market OperationsThe purchase or sale of U.S. government bonds and Buying bonds from investors puts more cash in investors hands and increases the money supplyEconomic SystemsMarket economy (Capitalism)individual freedom, competition, and less government controldecisions are based on the interaction of supply and demandMarket economy resultsindividual freedomCompetitionExternalitieshigher per capita GDPEconomic SystemsCommand economymajor economic decisions are made by the central governmentthe government "commands" what action producers takeSocialismattempt to distribute wealth more equally among all citizensgovernment owns some of the factors of production and distributes the products and wagesCommunismthe central government make all major economic decisionsInefficiency, slow growthCommand Economy can resultInefficiencyslow growthMixed economiesindividuals carry on economic affairs freelybut are subject to some government intervention