Economic Systems


U.S. currency
[audio] Economic Components

  • Economy: Producing, buying, and selling goods and services.
  • Labor Force: All the men, women and children who could work.
  • A labor force contributes to an economy that is working well by being large enough and skilled enough to do all the jobs that have to be done.
  • Equipment and tools contribute to an economy that is working well if there are enough of the right tools and equipment available to do the work that is needed.
  • Transportation contributes to an economy that is working well because there has to be transportation available to carry resources and products to places they are needed.
  • Credit: Ability to borrow money.
  • Credit contributes to an economy that is working well because an economy needs credit available for both the people buying goods and the people selling goods so that they don't have to wait to buy what they need.
  • Demand for products and services contribute to an economy that is working well because there must be a demand for products and services in order for anyone to make money.
  • Profit: Money made from selling a product or service after taking out the cost to make the product or service.
  • A company makes a profit when it can sell a product or service for more money than it cost to make it.
  • The cost of a product or service is determined by the availability of natural resources, equipment and tools, transportation and credit.
  • The selling price of a product or service is determined by its demand.
  • Making a profit contributes to an economy that is working well by allowing companies to stay open for business thus creating jobs for people and creating the need for other companies to supply them.


[audio] America makes an economic shift

  • Businessmen switched their businesses from trade to manufacturing because they could make big profits in manufacturing.
  • Banks began investing money and offering credit to new American manufacturing businesses because other manufacturing businesses were making so much money.
  • Agricultural Economy: Economy that met most of the needs of the colonists
  • Depression: When economic problems get bad and people are out of work.
  • The demand for the agricultural products of the West came from the Northeast and countries in Europe.
  • The product of the South that was in the greatest demand was cotton.
  • Two factors that were essential to the continued health of the Southern economy were:
    a. slave labor
    b. land