ECONOMICSThe social science that deals with

production, distribution and consumption of goods and services.

What to produce?How to produce?

For whom to produce?

economic system – the organized way that a government answers the following questions:

Traditional economies have been historically found in underdeveloped

countries. Trading, farming, hunting and gathering are used in this type of

economy. Believe it or not, this economic system is still found today in parts of

South American, Asia and Africa.

Traditional economy – economic decisions are based on custom

and habit.

command economy – a system in which the government makes the major decisions

regarding the production and

distribution of goods

and services.

Also called a planned economy, the government

decides on what to produce, how to produce and for whom to produce.

It tends to be poorly organized and lack quality control. China used to be a command economy but is

now allowing free enterprise. Cuba, North Korea and Myanmar are command economies.

What do these countries have in common?

Unlike a command economy, supply and demand is involved on

deciding on what to produce, how to produce and to whom to

produce. The US is considered a market economy even though

there is no country that has a total market economy. Why do you think

that is?

Market economy – a system in which consumers help determine what is to be produced by buying or

not buying certain goods and services.

mixed economy – a combination of command and

market economies.command market

China ? USA?Iran?

Truth is…economies are always changing!

Southwest Asian Economies

marketcommand

Saudi Arabia

Iran

IsraelTurkey

Warm-up Tuesday, 11/19/13Who makes most of the important decisions

in an oligarchy?

• AGENDA:

• Finishing economic terms

• OPEC/Supply and Demand

• ME Economy: Human Capital and Capital Goods

• ME graphs

Announcement: Government Quiz tomorrow

Trade

• specialization – products a country makes best and that are in demand on the world market.

• trade barrier – anything that restricts trade from one country to another.

• tariff – a tax on imports or exports• quota – a limit on how many products can be

imported• embargo – a halt to trade with another country

or group of countries

The exchanging of goods and services

OPEC

• OPEC was established in 1960 by five original member countries: Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela and has since been joined by others. The expressed purpose of the organization is to see that global oil prices remain fair and stable, allowing member nations to earn needed money from the sale of their oil. They do this by adjusting their petroleum production to help maintain a balance in supply and demand. OPEC ministers meet at least twice yearly to make decision about members’ oil production levels.

currency – something that is used as exchange; money

exchange rate – a system of changing from one type of currency (money) to another

capital goods – Items that are used to produce something. Ex: machinery, computers, factories

human capital – the set of skills which an employee acquires on the job which increase that employee’s value in the marketplace

literacy rate – The amount of people who can read and write in a country.

per capita – for each person

standard of living – the degree of wealth and material comfort that is available to people.

infant mortality – the death of children under one year of age.

life expectancy – the time period that a person is expected to live.

gross domestic product (GDP) – the total market value of all goods and services produced by a country during a specific time period.

entrepreneur – an individual who starts their own business