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1. What economic system is based on 1. What economic system is based on bartering (trading without money)?bartering (trading without money)?

Traditional EconomyTraditional Economy

2. What economic system is when the 2. What economic system is when the government is in control?government is in control?

Command/Planned/Central EconomyCommand/Planned/Central Economy

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1. What kind of government distributes power 1. What kind of government distributes power to only one source or person?to only one source or person?

UnitaryUnitary

2. What kind of government distributes power 2. What kind of government distributes power to states/provinces and a national to states/provinces and a national

government?government?

FederalFederal

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1. What kind of trade barrier restricts all 1. What kind of trade barrier restricts all trading?trading?

EmbargoEmbargo

2. What kind of trade barrier set a maximum 2. What kind of trade barrier set a maximum amount of goods that can be amount of goods that can be

imported/exported?imported/exported?

QuotaQuota

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Video Name 4: Natural ResourcesVideo Name 4: Natural Resources

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Video Name 1: ColumbusVideo Name 1: Columbus 12 Facts12 Facts

Distribution of Government PowerDistribution of Government Power1.1.UnitaryUnitary: form of : form of government in whichgovernment in which powerpower is held by is held by one one centralcentral authorityauthority

CentralCentral government government has all the powerhas all the powerConstitutionConstitution tells all of tells all of the duties and powers the duties and powers of the central of the central governmentgovernment

Distribution of Government PowerDistribution of Government PowerGovernment Government cancan give give power to lower levels power to lower levels such as such as statesstates

Power may be Power may be changedchanged or taken backor taken back

Example----Soviet Example----Soviet UnionUnion

Distribution of Government PowerDistribution of Government Power2.2. Confederation Confederation: : voluntaryvoluntary associations of associations of independent independent states that have some states that have some common common purpose purpose All agree to certain All agree to certain limitationslimitations on their freedom of on their freedom of action action and establish some joint group to discuss and establish some joint group to discuss issuesissues Civil WarCivil War: : ConfederateConfederate States of America States of America

Distribution of Government PowerDistribution of Government Power

3.Federal3.Federal:: form of form of government in government in which which powerpower is is divided between divided between

1.1. oneone centralcentral authorityauthority

2.2. severalseveral regional regional authoritiesauthorities

3.3. Example: Example: 1.1. WashingtonWashington DC DC

(Central)(Central)2.2. 50 50 StatesStates

( regional) ( regional)

Citizen ParticipationCitizen Participation1.1.AutocracyAutocracy: government by a single person having : government by a single person having

unlimited powerunlimited power

CitizensCitizens have have little little or no poweror no power

Government keeps power through Government keeps power through threatthreat of of punishmentpunishment and and violenceviolence

Examples:Examples: MonarchyMonarchy: has a : has a kingking, queen, emperor or , queen, emperor or empressempress.. DictatorDictator: A country ruled by a : A country ruled by a singlesingle leader The leader leader The leader

isn’t isn’t electedelected and may use and may use forceforce to keep control to keep control

Citizen ParticipationCitizen Participation

2. 2. OligarchyOligarchy:: government by the few, sometimes a government in which a small group exercises control especially for corrupt and selfish purposes.

The citizen has a very limited (small) role.

Citizen ParticipationCitizen Participation

3. 3. DemocracyDemocracy:: the government’s power comes the government’s power comes from the from the people people (it’s a(it’s a republic) republic)Government Government officialsofficials are are electedelected by the by the peoplepeople. . Everyone who is Everyone who is eligibleeligible is able to is able to votevoteA democracy is determined either A democracy is determined either directly directly (everyone votes on laws)(everyone votes on laws) or through elected or through elected representatives.representatives.

Types of Democratic GovernmentsTypes of Democratic GovernmentsPresidentialPresidential: a system of government in : a system of government in which the which the PresidentPresident is is constitutionallyconstitutionally independent of the independent of the legislaturelegislatureThe President is The President is NOTNOT connected to connected to CongressCongress..The party with the The party with the mostmost seats doesn’t seats doesn’t pick the pick the presidentpresident, the people do. , the people do. The President is elected The President is elected separately separately and and works works independently independently of the legislative of the legislative branchbranch

Types of Democratic GovernmentTypes of Democratic GovernmentParliamentaryParliamentary: a system of : a system of government having the real government having the real executiveexecutive power vested in a power vested in a cabinet cabinet composed of members composed of members of the of the legislature legislature who are who are individually and collectively individually and collectively responsibleresponsible to the legislature to the legislature

PrimePrime Minister Minister ISIS connected connected with the Legislaturewith the Legislature

Types of Democratic GovernmentTypes of Democratic GovernmentHow does a Prime Minister get How does a Prime Minister get elected???elected???

1.1. Citizens Citizens votevote for for membersmembers for for the House of the House of CommonsCommons

2.2. The The politicalpolitical party with the party with the mostmost seats in the House of seats in the House of CommonsCommons pickspicks the the primeprime minister minister

End of GovernmentEnd of Government

EconomicsEconomicsEconomics:Economics: the study of the study of buyingbuying, , sellingselling and and trading goods and servicestrading goods and services

ScarcityScarcity:: the the conflictconflict between people’s unlimited between people’s unlimited desiresdesires and their and their limitedlimited resources resources People don’t have enoughPeople don’t have enough time time, , moneymoney or resources to or resources to

get everything they get everything they wantwant..

EconomicsEconomicsOpportunity Cost:Opportunity Cost: is what you is what you give upgive up in order to do in order to do or have or have somethingsomething else else

ProducersProducers: someone who : someone who makesmakes goods/provide goods/provide serviceservice

Consumers:Consumers: someone who someone who buysbuys a good or service a good or service

There are basic There are basic EconomicEconomic questions any nation has questions any nation has to ask:to ask:

1.1. WhatWhat are we are we producing/servicing?producing/servicing?

2.2. For WhomFor Whom are we are we producing/servicing?producing/servicing?

3.3. HowHow are we are we producing/servicing?producing/servicing?

To answer these questions, To answer these questions, economic systemseconomic systems were were created.created.

Economic SystemsEconomic Systems

Traditional SystemsTraditional SystemsSocial rolesSocial roles and and cultures (the way of life)cultures (the way of life) determines determines whatwhat, for , for whom whom and and howhow goods and goods and services are producedservices are producedExample: Some countries may say that your Example: Some countries may say that your familyfamily are to be only are to be only farmersfarmers and that you are to and that you are to farm using hand toolsfarm using hand toolsExample: Only Example: Only malesmales can be can be huntershunters and and femalesfemales can only cook can only cook mealsmeals

Traditional SystemsTraditional SystemsBarterBarter System- System- tradingtrading for for goodsgoods and services, and services, no no moneymoney is involved when buying or is involved when buying or sellingselling things…like trading food at things…like trading food at lunchlunch

ThirdThird World Countries: World Countries: poorpoor countries countries

LowLow Productivity: they don’t Productivity: they don’t makemake a lot of things a lot of things

Command SystemsCommand SystemsGovernmentGovernment determines determines whatwhat, for , for whomwhom and and howhow goods and services are goods and services are producedproduced

Example: you may build Example: you may build a a factoryfactory to make to make expensive shoes, but the expensive shoes, but the governmentgovernment may tell you may tell you to start making to start making coatscoats at a at a low price.low price.

Command SystemsCommand SystemsCountries with a command economy usually Countries with a command economy usually have a government that is have a government that is communistcommunist:: government completely controls the government completely controls the economyeconomy and and

governmentgovernmentNorth KoreaNorth Korea

CubaCuba

Free Market SystemFree Market SystemIndividualsIndividuals determines determines whatwhat, for , for whomwhom and and how how goods goods and services are producedand services are producedDoesn’t mean that goods are Doesn’t mean that goods are freefree or don’t or don’t costcost anything anything..GovernmentGovernment can’t tell Individuals: can’t tell Individuals: WhatWhat to sell to sell WhomWhom to sell to to sell to HowHow to produce or service to produce or service

Free Market SystemFree Market SystemIndividualsIndividuals own own the the machinesmachines and and tools tools that make the good or provide a that make the good or provide a serviceservice

ProducerProducer + + ConsumerConsumer = = Free MarketFree Market

MarketMarket determines the determines the price price

Free Market SystemFree Market SystemGovernmentGovernment cant cant controlcontrol what businesses what businesses do do

No No lawslaws to protect to protect consumers consumers from bad from bad producersproducers Producer sells Producer sells milkmilk that is that is contaminatedcontaminated No No ageage requirements for requirements for alcoholalcohol or or cigarettescigarettes

Mixed Economic SystemMixed Economic SystemMost Most democraticdemocratic countries realize they want countries realize they want individualindividual freedom to run their freedom to run their businessbusiness but but realize that there needs to be realize that there needs to be somesome lawslaws to to controlcontrol what businesses do what businesses do

Most national economies today are Most national economies today are MixedMixed economic system.economic system. MixtureMixture of of free marketfree market and and commandcommand

Mixed Economic SystemMixed Economic SystemExample: The government says you can sell Example: The government says you can sell milkmilk, but you can’t sell it if you know that it is , but you can’t sell it if you know that it is contaminatedcontaminated or has a high level of or has a high level of germsgerms..

Mixed Economic SystemsMixed Economic Systems

Even though most countries Even though most countries technicallytechnically ( (bookbook definition) have a mixed economy, many definition) have a mixed economy, many mixedmixed economies are called the following in economies are called the following in the real world:the real world: MarketMarket Economy Economy FreeFree MarketMarket Economy Economy FreeFree EnterpriseEnterprise Economy Economy

TradeTradeTrade:Trade: exchanging one exchanging one good good for another for another goodgood between between different different countriescountriesImport:Import: to to receive receive a good from another countrya good from another countryExport:Export: to to sendsend a good to another country a good to another countryUnited statesUnited states imports computers from imports computers from JapanJapan..United States United States exportsexports corn to the corn to the United KingdomUnited Kingdom..The United Kingdom imports The United Kingdom imports shoesshoes from from JapanJapan..

United

States

Japan

United

Kingdom

Computers

Corn

Shoes

TVs

Toothpaste

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Video Name 1: ReligionVideo Name 1: Religion 10 Facts10 Facts

Trade Deficit and SurplusTrade Deficit and SurplusTrade Trade FormulaFormula: Exports – Imports = : Exports – Imports = Deficit or Deficit or SurplusSurplusTrade Trade DeficitDeficit: when a country : when a country importsimports more more that it that it exportsexports Example: The United States exported Example: The United States exported $5$5

billion dollars of goods to billion dollars of goods to other other countries countries while it imported while it imported $30$30 billion dollars of good billion dollars of good

Exports (5 billion)Exports (5 billion) – – Imports (30billion)Imports (30billion) = = -25 billion deficit -25 billion deficit (bad)(bad)

Trade Trade SurplusSurplus: when a country : when a country exportsexports more than it more than it importsimports Example: The United States exported Example: The United States exported $20$20

billion dollars of goods to other countries while billion dollars of goods to other countries while it only imported it only imported $10$10 billion dollars of good billion dollars of good

Exports (20billion)Exports (20billion) – – Imports (10 billion)Imports (10 billion) = 10 billion = 10 billion surplus (good)surplus (good)

Trade BarriersTrade Barriers

Sometimes nations use trade Sometimes nations use trade barriersbarriers if they want to if they want to limit limit or or stop stop trade with trade with other other nationsnations

EmbargoEmbargo: a government order : a government order restricting restricting or prohibiting or prohibiting businessbusiness, , especially especially tradetrade, with a particular , with a particular nationnation The The United StatesUnited States has an has an embargoembargo with with

CubaCuba

Trade BarriersTrade Barriers

QuotaQuota:: sets a sets a maximummaximum number of a certain item number of a certain item that is that is allowed allowed to enter a countryto enter a country Japan can only send Japan can only send 10,000 10,000 SUVs (cars) to the SUVs (cars) to the

United StatesUnited States

TariffTariff: a : a fee (tax)fee (tax) that has to be that has to be paidpaid in order to in order to exportexport your good to another country your good to another country Japan Japan has to pay the has to pay the United StatesUnited States government a government a

tariff of tariff of $200$200 for every for every carcar they bring into the United they bring into the United States. States.

Exchange RatesExchange RatesBarteringBartering was the first way humans traded for was the first way humans traded for goodsgoods and and servicesservicesBut bartering proved to be But bartering proved to be inefficientinefficient (not a (not a smoothsmooth process) process) because not everyone because not everyone wantedwanted certain certain itemsitems at certain at certain

timestimes.. You may have to trade You may have to trade severalseveral times to get what you times to get what you

wantwant

ExchangeExchange Rates: this systems states how Rates: this systems states how muchmuch of one of one currencycurrency takes to takes to buy buy another currencyanother currency

Exchange RatesExchange RatesEach country usually has their own Each country usually has their own currency (type of money).currency (type of money).

How can How can tradetrade work between work between countriescountries with different with different currencies? currencies? There is a system of There is a system of exchangingexchanging currency between currency between

countriescountries ExchangeExchange Rates: allow for Rates: allow for countriescountries to trade with each to trade with each

other by knowing the other by knowing the valuevalue of each countries of each countries currencycurrency

Exchange RatesExchange RatesExchange ratesExchange rates show the show the valuevalue of a of a country’s currency compared to another country’s currency compared to another countrycountry1 1 EuroEuro = 1.5 = 1.5 U.SU.S. dollar ( us dollar is . dollar ( us dollar is weaker, you need 50 cents extra to get weaker, you need 50 cents extra to get one euro)one euro)1 1 U.S. dollar = U.S. dollar = 10 10 pesos( peso is weaker, pesos( peso is weaker, you need 9 pesos extra to get one us you need 9 pesos extra to get one us dollar)dollar)

Factors of Production/Productive ResourcesFactors of Production/Productive Resources

The Factors of The Factors of Production:Production: Are the Are the thingsthings

neededneeded to to makemake or service things. or service things.

These things are These things are put into put into separateseparate categoriescategories. .

Factors of Production/Productive ResourcesFactors of Production/Productive Resources

1. Land/Natural 1. Land/Natural ResourcesResourcesa. Renewablea. Renewable

b. Non-Renewableb. Non-Renewable

2. Labor/Human 2. Labor/Human ResourcesResources

3. Capital Resources3. Capital Resources

4. Entrepreneurs4. Entrepreneurs

Natural ResourcesNatural ResourcesNatural Natural resourcesresources are are substances we obtain substances we obtain from the from the landland, , waterwater, , air air around us and the around us and the landland itself. itself.

Raw materialsRaw materials that that help to make help to make finishedfinished goods. goods.

Natural Renewable ResourcesNatural Renewable ResourcesSome Some natural resourcesnatural resources can be reproduced can be reproduced within a within a few few years or years or decadesdecades. .

These are called These are called renewable resourcesrenewable resources. . TreesTrees, , water,water, plants, and air are examples of plants, and air are examples of renewable resources. renewable resources.

Natural Non-renewable ResourcesNatural Non-renewable ResourcesOilOil, and , and mineralsminerals take take hundredshundreds, , thousandsthousands and even millions of years to be made. These and even millions of years to be made. These are called are called non-renewablenon-renewable resources. resources.

Some of these minerals are gold, Some of these minerals are gold, silversilver, iron, , iron, diamondsdiamonds, , petroleumpetroleum and and coalcoal. .

Capital ResourcesCapital ResourcesItems such as Items such as machinesmachines, factories, , factories, technologytechnology and and suppliessupplies.. Factory: A Factory: A building building where things are where things are mademade.. HammersHammers, , SawsSaws, Glue and , Glue and toolstools are some are some

examples of capital goodsexamples of capital goods

Capital ResourcesCapital ResourcesThings that Things that humanshumans mademade in order to in order to helphelp them them make something elsemake something else Example: Example: treetree + + steelsteel = = axeaxe TreeTree and and steelsteel are are naturalnatural resources but they resources but they

were changed into a were changed into a capitalcapital good as an good as an axeaxe

Labor ResourcesLabor ResourcesWorkersWorkers with the appropriate with the appropriate knowledge knowledge and and experience to make experience to make goodsgoods or provide or provide servicesservices. .

“ “ The The peoplepeople who make the who make the thingsthings or provide the or provide the serviceservice””

Does not include the Does not include the owner/sowner/s of a business even if of a business even if they they helphelp their workers. their workers.

EntrepreneurEntrepreneurEntrepreneurEntrepreneur: An : An individualindividual in business in business who sees an opportunity and is willing to who sees an opportunity and is willing to accept the accept the personalpersonal, professional, and , professional, and financialfinancial risks in risks in startingstarting this business this business

EntrepreneurEntrepreneurAn entrepreneur puts the An entrepreneur puts the naturalnatural, human, , human, and and capitalcapital resources together in order to resources together in order to make make moneymoney but they take on a lot of but they take on a lot of riskrisk..

An entrepreneur operates in a An entrepreneur operates in a freefree market market and and mixedmixed economy economy

Gross Domestic ProductGross Domestic ProductGDPGDP:: tells the total tells the total valuevalue of the of the goodsgoods and and servicesservices that a that a countrycountry produces in one produces in one yearyear:: A country’s A country’s “Income”“Income” Take the Take the valuevalue of everything made in of everything made in oneone year (January to December) year (January to December)

such such carscars, computers, , computers, toolstools, food, and a lot , food, and a lot moremore GDPGDP: is a way to : is a way to comparecompare the the economiceconomic strengthstrength of different countries of different countries StandardStandard of living: a measure of the of living: a measure of the qualityquality of one’s life of one’s life

Look at the average person’s level of …Look at the average person’s level of … IncomeIncome EducationEducation Health Health

Gross Domestic ProductGross Domestic ProductInvesting in Investing in educationeducation and and workers’ trainingworkers’ training: If the : If the human capitalhuman capital (workers) are better (workers) are better educatededucated and and having better training, most likely, there will be an having better training, most likely, there will be an increase increase in GDPin GDP

A good A good educationaleducational system system (HUMAN CAPITAL)(HUMAN CAPITAL)

Leads to more people in skilled jobs like Leads to more people in skilled jobs like doctorsdoctors, , teachers, teachers, lawyerslawyers, engineers. , engineers.

Gross Domestic ProductGross Domestic Product Investing in Investing in factoriesfactories, , machinesmachines and and technologytechnology

will help a country produce will help a country produce more more products products quickerquicker. .

This will help a This will help a countrycountry to have a to have a higherhigher GDPGDP

Gross Domestic ProductGross Domestic ProductA country’s A country’s largelarge amount of amount of naturalnatural resources can lead to an resources can lead to an increaseincrease in GDP in GDP If a country has a lot of….If a country has a lot of…. FarmlandFarmland

It will specialize is selling It will specialize is selling cropscrops ( (Canada and CubaCanada and Cuba)) OilOil

It will specialize in selling It will specialize in selling oiloil ( (VenezuelaVenezuela)) SilverSilver

It will specialize in selling It will specialize in selling silversilver. (. (MexicoMexico)) TreesTrees

It will specialize in selling It will specialize in selling treestrees ( (Canada and BrazilCanada and Brazil))