economics review

Economics

• The science that deals with production, distribution, and consumption of goods and services or material welfare of human kind.

How do different economies answer the basic questions…

-What to produce?

-How to produce?

-For whom to produce?

Entrepreneur

- an individual who accepts financial risks and undertakes new financial ventures

Bill Gates of Sam Walton of

Microsoft Wal-Mart

Types of Systems

• Market Economy

• Command Economy

• Traditional Economy

• Mixed Economy

Market Economy• – business owners and consumers decide

what to sell and buy

Command Economy

• – government decides what is made and sold

Traditional Economy

• – “same way we have always done it”

Mixed Economy

• – a combination of two or three economy types

Traditional (Same)

– “way we have always done it”

Market (Choice)– business owners and consumers decide what to sell and buy

Mixed(Two or More)

– a combination of two or three economy types

Command(Government)

– government decides what is made and sold

Economies

Most Countries have a Mixed Economy• U.S.A

– Mix of Market and Command Economy

Most Countries have a Mixed Economy• Cuba

– Mix of Command with Traditional moving toward a Market Economy

Who? What kind?

-

This government is called the People’s Republic of ….. But the people are just being to receive a voice. Free enterprise is just beginning to become real.

Who? What kind?

- This country is a constitutional monarchy. It has very little natural resources. The education system is excellent. The country is know for it’s technical advances.

.

Who? What kind?

• This country is a • developing

• country. The • government is• encouraging • farmers to use

• new technology instead of doing things the same old way. Entrepreneurs are investing in this country’s economy.

Continuum: Pure Command to Pure Market

Place China, India and Japan on the continuum line.

• _____________________________________

Pure Pure

Command Market

There is a lack of entrepreneurship in Asia.

• This greatly affects the developing economies of the region. List reasons why. Lack of: new businesses, new ideas, employment, developing leadership, new products

• No country can produce everything it needs. • This is due to location, climate, natural

resources, technology.• Countries must “specialize”. • They produce what they can and then sell those

products to other countries and buy what they need.

• This increases the need for voluntary trade among countries. Two or more countries trade with each other, all sell their products and get items they need from the others.

Trade Barriers

• Any government imposed restriction that interferes with one country trading with another

Tariffs

• A tax placed on goods imported from another country

Quota

• Limits the amount of a good imported

Embargo

• Any restriction by a government that stops the importing of a good from another country; ban

Why is investment important to a nation’s economy?

• Create new products

• Develops new ideas

• Creates jobs

• Raises the standard of living (higher GDP per capita).

Why do countries have currency?

• Currency allows people to trade (buy and sell) at an established rate. There is a standard to determine the worth of goods and services. Countries have exchange rates for other countries’ currencies depending on the value of that currency.

Project

1. Divide your cards into goods and services.

2. Then divide the goods into agriculture and products.

3. Total the numbers of each category. (3)

agriculture____ products_____services__