Dow down 416 pts! - Why?

Black Tuesday struck the U. S. stock market in chain after the market plummeted in China and Europe, along with distressing forecasts for economic development in the USA.
On February 27 the Dow Jones industrials index went down 416.02 points, or 3.5 percent to 12.215,24, following the New York Stock Exchange's trading. The index was losing nearly 550 points during the trading. The decline was the Dow's worst since Sept. 17, 2001, the first trading day after the terror attacks.
The Dow's percentage decline was modest in historical terms, not even ranking among the top 20 all-time percentage drops since 1950. The Dow declined by more than 4 percent on two dates in 2002.
Some economists and analysts said that the market was girding for a possible recession later in the year, while others said stocks were simply staging a reasonable and needed correction, a University of Colorado economist Richard Wobbekind said that a large stock declines can affect consumer attitudes, making consumers feel less wealthy and likely to cut back on spending, which can in turn affect the U.S. economy.

Opportunity Costs

Opportunity cost: is the cost we pay when we give up something to get something else. There can be many alternatives that we give up to get something else, but the opportunity cost of a decision is the most desirable alternative we give up to get what we want.
One example that I can use to describe opportunity costs is that I had to stop buying fashion clothes each sunday or stop spend money in things that I don't really need and start earn money for the college because it is more important for me.

Types of Economic Systems

1.Define these 4 major economic systems:
*Traditional Economies: are found in rural and non-developed countries. It is an economic system in which resources are inherited, and it is based on primitive methods and tools. Economic decisions depend on tradition and custom not market activity. Today it is found mainly in agricultural parts of South America, Asia, and Africa.
*Centrally Planned (Command) Economy: economies in which the state decides what goods are produced, the methods of production, and who gets the goods.
*Market Economy: is an economic system in which the production and distribution of goods and services takes place through the mechanism of free markets guided by a free price system rather than by the state in a planned economy. In a market economy businesses and consumers decide what they will produce and purchase, as opposed to a planned economy where the government decides what is to be produced and in what quantities.
*Mixed Economy: it is usually defined as an economy that contains both private-owned and state owned enterprises or that combines elements of capitalism and socialism, or a mix of market eaconomy and command economy.

2.What is the difference between communism and socialism?
The difference between communism and socialism is that communism is when the government operates and controls all of the nations productions. Communism is a system of government in which the state plans and controls the economy and a single, often authoritarian party holds power, claiming to make progress toward a higher social order in which all goods are equally shared by the people. And socialism is when the government owns everything from banks to airplane companies. And everyone contributes to the economy. If the government owns and operates many of the nation's major industries such as banks, airlines, railroads, and power plants-but allows individuals to own other businesses, including stores, farms, and factories, that nation's economic system is called socialism.

Stock Market Game -1- Initial Investment Strategy

I plan on buying stock in Wal Mart, Walgreen, Apple and Yahoo Inc stores because there are a lot of stocks coming out this year. I plan on investing in clothing, computers, food, etc because some of this companies have good stock and is all the things that we need in everyday life.