Economics Unit

1. Economics Unit SS8E1 through SS8E5 EQ: What goods and services are produced in Georgia and how did entrepreneurs help with such products? EQ: How has Georgia engaged in trading with the world and how has that changed over time?

2. Early Georgia’s Economy • When the Georgia colony was 1st established • Goals were: Silk, cotton dyes, & wine • This did not work out due to climate and other factors • New cash crops became: • Rice, indigo, wheat, Forest products (lumber, rosin, turpentine), sugar cane • CHEAT ACRONYM: • Forest Products – lumber, rosin, turpentine • Indigo • Rice • Silk • Tobacco • These were all major cash crops well into the 18th century

3. Cotton farming came later in the 1700s. Cotton was the main crop until the 1920s. • 1786 • Cotton Gin is invented • “King Cotton” • This created a boom in Georgia’s textile industry. • Cotton was the backbone of Georgia’s economy until the mid 20th century. In 1915, boll weevils ruined much of the cotton crop. • From 1840 until the Civil War, Georgia was the largest producer of cloth in the southern states.

4. Georgia Today • Today’s crops: • cotton, peaches, corn, tobacco, and peanuts, poultry • 3 P’s – peaches, peanuts, poultry • Mineral Resources • Kaolin – white clay used in the manufacture of shiny paper (magazines) and other products • Bauxite – used in the manufacture of aluminum

5. Economy – system of growing, making, selling, buying and using goods and services • Manufacturing is an important part of Georgia’s economy today. • This includes the textile industry • World War II increased the demand for goods. Manufacturing expanded • Bell Bomber Plan • Savannah & Brunswick shipyards • Today’s manufactured goods include: • textiles, transportation equipment, processed foods, chemicals, paper, and plastic. • Auto manufacturing – Kia • Carpet manufacturing – Dalton

6. Service Industry – (people performing a service for other people) • Largest sector of Georgia’s economy. • These include: • legal advice, computer work, trade, finance, real estate, and construction. • Tourism is also a huge source of income for Georgia • Mild climate, State Parks, Historical sites

7. Trade History of Georgia • People have been trading in Georgia for hundreds of years. Long before Georgia was a state, Native American groups traded with each other. • Trade - the act of buying and selling goods. • Bartering – trading of goods and services without the use of money • Mercantilism • Colonies produce raw materials • These materials were shipped to England to make “finished” goods. • These finished goods were then shipped back to the colonies (and other countries) to be sold. • Timber, plant products, and animal pelts from Georgia were all sold in Europe.

8. When nations agree to trade with each other without charging tariffs, the act is called free trade. • Free Trade makes cheap foreign foods available to consumers. • It also allows industries in use their resources for production and import what they cannot produce cheaply.

9. After the Civil War, leaders in Georgia wanted to make a “New South”. • Goals to achieve this “New South”: • Making peace with the North • increasing industry • growing a wider variety of crops • In the 19th century, Atlanta, Georgia became a center of trade. • The Civil War helped Atlanta’s industries to grow. • Railroads increased trade in Georgia, and linked the region to many markets.

10. Atlanta’s well-developed Highway system, Deepwater Ports, and Railroads also helped trade in the state. • Later on, Hartsfield-Jackson Airport also made trade in the state easier. • Like most southern cities in the mid-20th century, Atlanta was racially segregated. • Nevertheless, more blacks owned businesses there than in other parts of the U.S. • Auburn Avenue was a street in a black area of Atlanta. It was a center of black culture and education. It became a heart of business for the country.

11. Economic Unit SS8E3

12. Today, Atlanta is one of the most important trade centers in the United States. It is widely recognized as the business capital of the Southeast and is home to companies such as CNN, Delta Airlines, and UPS. • One reason Georgia’s economy has thrived is because of entrepreneurs. • As Georgia industrialized in the early 19th century (1800’s) many entrepreneurs began to emerge. • Entrepreneurs – people who see a need for a good or service and satisfy the need • They are willing to take a risk to bring these goods and services to market. • They help to expand and develop an economy

13. Coca-Cola • Coca-Cola, Delta Airlines, Georgia-Pacific, and The Home Depot are examples of Georgia businesses that were started by entrepreneurs. • Coke is one of the most familiar products in the world. • The company was started in the 1880s by a Georgian entrepreneur named John Smith Pemberton. • Pemberton worked as a pharmacist. He created the cola formula and sold it as a human tonic.

14. Delta Air Lines • Delta Air Lines is one of the largest airlines in the country. • Delta began as an aerial crop dusting service, which sprayed farm crops with chemicals and fertilizer. • The company was started in the 1920s by an entrepreneur named Collett E. Woolman. • Today, Delta flies passengers all over the world.

15. Georgia-Pacific • Georgia-Pacific is a paper company based in Atlanta. It is one of the world’s top producers of tissue, pulp, paper, packaging, and building goods. • An entrepreneur, Owen R. Cheatham started the company in 1927 as a small lumber mill. • By 1938 the company was running five lumberyards in the South. • The company continues to be successful and produce a wide assortment of goods.

16. The Home Depot • The Home Depot is the world’s largest chain of home improvement stores. • It started in 1978 by entrepreneurs named Bernie Marcus and Arthur Blank. • Before The Home Depot opened, hardware stores were specialized. A consumer might have to visit many stores to buy the materials needed for one project. • Home Depot sold all of the possible materials someone might need.

17. Economic Unit SS8E4

18. EQ: How are the revenue sources and services given by state and local governments? • All governments require money. Running the government as well as providing services both cost money. • The money that local governments bring in is called revenue. • Revenue – source of income • Expenditure – expenses

19. Taxes • Taxes are the largest source of revenue for Georgia. – 90% • There are many different kinds of taxes: • Income Tax: Personal and Corporate • Sales Tax • Property Tax • The largest non-tax revenue source for the state of Georgia is the state lottery.

20. Spending the Money • Budget – plan for spending revenue for a particular year • Georgia is required by its constitution to have a balanced budget. • This means the state cannot spend more money than it brings in. • Expenses cannot exceed (be more than) Revenue • The governor submits a budget to the state legislature, they modify it, the governor signs it. • The budget may be reviewed and changed if spending exceeds revenue.

23. Economic Unit SS8E5

24. EQ: How can personal money management choices effect me as a person, now and in the future? • Income – money paid for doing work; can be allowance or a gift, or money earned from selling something. • Savings – money not spent from income that is to be set aside for later • Investing – using savings in a way that will earn a greater return in the future. • Your money will “grow” or increase in value • Some investing requires risk • Stock Market

25. There are many different ways to save money. • It is best to save money in some type of bank. In a bank, money can earn interest. • Interest is a charge that the bank pays you to use your money. • Although you can get your money at any time, a bank uses your money in various ways. For this privilege, the bank pays you a percentage of the amount that you have saved. • The amount of interest paid ranges from less than 1% to as much as 13 to 14%.

26. Notice that the bank balance started with $10 and no new money is put into the bank, except interest. If the person with the bank account does not take the money out and just lets the interest add up, the balance will continue to grow. This affect is called compounding interests. Compounding interest also affects both savings and credit accounts.

27. Investing and Credit • Investing is spending money in the hope of earning more money than is spent. • Stocks and bonds are small investments in large companies. If the company does well, the stock makes money. If it does poorly, the stock loses money. • Many people invest in stocks and bonds through a retirement plan through their job. – usually a 401K • Mutual Funds are another form of investment. • These investments, invest in many stocks at once.

28. Investment involves risk. • Risk is the possibility of losing money that bas been invested. • Often, the greater the risk of losing the money, the greater the possible return will be if the investment does well. • Credit is money that is borrowed from a bank. • When you use the bank’s money, you must pay the bank interest.

29. The same compounding interest that worked in your favor in a savings account will work against you when you borrow money. This fact is why it is important to only borrow when absolutely necessary and pay back borrowed money as quickly as possible.

30. There are many different types of credit: • Credit Cards • Home Loans • Student Loans • Anytime money is owed, credit has been extended. • The key to personal finance is never to borrow more than you can pay off in a reasonable amount of time. • Learning to control and understand personal finance is the job of every adult.