8
Contents
Part Two
Dynamics of the
Economy
How does a market economy
work?
6
The Problem of Scarcity 
80
Scarcity  81
An Economic System  82
Economic Inputs  82
7
Economic Systems 
91
Types of Economic Systems  92
Market Economy Features  94
Mixed Economies  96
8
Market Forces 
102
Market Forces at Work  103
Supply and Demand  104
Profit  107
Competition  108
Role of the Consumer  109
9
Economic Indicators 
112
Economic Indicators  113
Gross Domestic Product (GDP)  114
Standard of Living  117
Consumer Price Index (CPI)  118
Inflation Rate  118
Unemployment Rate  121
The Stock Market as an Indicator  122
Keys to the Status of the Economy  123
10
Market Economy 
127
Dynamics  127
Economic Spirals  128
The Business Cycle  128
Business Cycle and Economic
Indicators  133
11
Role of Government 
136
Constitutional Powers  137
Market Weaknesses  138
Government Economic Activities  141
12
International Trade 
147
International Trade  148
Why Trade?  148
Exports and Imports  150
Foreign Exchange Rates  151
Jasmine Lawrence—
This Teen Means Business!  154
13
Trade Relations 
157
Government Regulation of Foreign
Trade  157
Enforcement of Trade Laws  159
Trade Relations  160
Globalization  161
Concerns About Globalization  163