economic dictionary economic system the way in which a nation uses its resources to satisfy...
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Economic DictionaryEconomic Dictionary
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Economic systemEconomic system
The way in which a nation The way in which a nation uses its resources to satisfy uses its resources to satisfy people’s needs and wants.people’s needs and wants.
What is the difference between a need and a want? What are examples of each?
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Real World ExampleReal World Example
What resources do we have?What resources do we have?
What will be produced?What will be produced? How will it be produced?How will it be produced? For whom will it be produced?For whom will it be produced?
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Command EconomyCommand Economy
The The governmentgovernment decides decides what goods will be what goods will be produced, how they will produced, how they will be produced, and how be produced, and how they will be distributed they will be distributed
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Real World ExampleReal World Example
Example-communist Example-communist countries like Cuba and N. countries like Cuba and N. KoreaKorea
-Workers get same pay so -Workers get same pay so poor quality of goodspoor quality of goods
-little incentive for quality or -little incentive for quality or workers workers
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Traditional EconomyTraditional Economy
Economic system in which Economic system in which social roles (elders) and social roles (elders) and culture determine how goods culture determine how goods are made, sold, and bought.are made, sold, and bought.
Resources are determined by Resources are determined by inheritance, based on inheritance, based on primitive methods and toolsprimitive methods and tools
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Real World ExampleReal World Example
subsistence farmingsubsistence farming People produce most of People produce most of
what they need to survivewhat they need to survive Underdeveloped countries; Underdeveloped countries;
rural areasrural areas Carpet makers, hand made Carpet makers, hand made
craftscrafts
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Market Economy (capitalism)Market Economy (capitalism)
Based on individual choices Based on individual choices and voluntary tradeand voluntary trade
Free enterpriseFree enterprise Individuals and business Individuals and business
make economic decisionsmake economic decisions
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Real World ExampleReal World Example
Skill, education and type of Skill, education and type of job determine salaryjob determine salary
United States’ economy United States’ economy has a large portion of has a large portion of market economymarket economy
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Mixed EconomyMixed Economy
Economic system that Economic system that has features of has features of traditional, command, traditional, command, and market and market
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Real World ExampleReal World Example
Most countries are mixedMost countries are mixed United States- examples: United States- examples:
minimum wage minimum wage (government determines), (government determines), quilts made by the Amish quilts made by the Amish (traditional) and private (traditional) and private owned businesses (market)owned businesses (market)
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Voluntary TradeVoluntary Trade
People trade freelyPeople trade freely TradeTrade is the voluntary exchange is the voluntary exchange
of of goodsgoods, , servicesservices, or both. , or both.
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Real World ExampleReal World Example
One country (US) One country (US) decides to trade with decides to trade with JapanJapan
Japan has products US Japan has products US citizens want-electronic, citizens want-electronic, cars, technology cars, technology
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Trade BarriersTrade Barriers
Any law or practice Any law or practice that a government that a government uses to limit free trade uses to limit free trade between countries. between countries. Physical features can Physical features can be trade barriers too!be trade barriers too!
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Real World ExampleReal World Example
Tariffs (taxes) and quotasTariffs (taxes) and quotas Embargos (US against Embargos (US against
Cuba)Cuba) Physical barriers could be Physical barriers could be
war or landformswar or landforms
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Exchange Currency/RateExchange Currency/Rate
Amount of one currency Amount of one currency that can be purchased that can be purchased for a given unit of for a given unit of anotheranother
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Real World ExampleReal World Example
Money is currencyMoney is currency Value of currency between countries Value of currency between countries
changes -it affects the cost of goods changes -it affects the cost of goods between countriesbetween countries
Ex: A pair of jeans in Japan costs Ex: A pair of jeans in Japan costs 17,880 yen…WOW! How much in US 17,880 yen…WOW! How much in US dollars? The cost is $180. dollars? The cost is $180.
Still a lot of money!Still a lot of money!
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CurrencyCurrency
Money in any form that Money in any form that is accepted as a medium is accepted as a medium of exchange, but of exchange, but specially paper money specially paper money
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Real World ExampleReal World Example Currency is name of a country’s Currency is name of a country’s
money- it looks different and is money- it looks different and is valued differentvalued different
Euro – the common currency of Euro – the common currency of most of Europemost of Europe
Saudi Arabia-riyalSaudi Arabia-riyal Israel-shekel Israel-shekel Japan-yenJapan-yen
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EntrepreneurEntrepreneur
Someone who brings Someone who brings together land, labor, and together land, labor, and capital goods to produce capital goods to produce goods and services goods and services
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Real World ExampleReal World Example
Business owner who thrives on Business owner who thrives on free enterprisefree enterprise
Bill Gates –MicrosoftBill Gates –Microsoft Facebook, Google, real estate Facebook, Google, real estate
agents!agents! Donald Trump Donald Trump
Would an entrepreneur be allowed in an autocratic form of government? Why or Why not? Answer on your organizer
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Human CapitalHuman Capital
Knowledge and skills that Knowledge and skills that allow workers to produce allow workers to produce goods and services and earn goods and services and earn an income. an income.
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Real World ExampleReal World Example
College education is human College education is human capitalcapital
Trained employeesTrained employees Japan’s greatest resource is the Japan’s greatest resource is the
skill of their people skill of their people How could a low literacy rate (the ability to read or write) affect the economic growth of a country? Answer on your organizer
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GROSS DOMESTIC PRODUCT GROSS DOMESTIC PRODUCT (GDP)(GDP)
Total market value of all Total market value of all goods and services goods and services produced in a countryproduced in a country
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Real World ExampleReal World Example
United States-$13 trillionUnited States-$13 trillion Saudi Arabia-$366 billionSaudi Arabia-$366 billion Botswana-$17 billionBotswana-$17 billion Japan-$4 trillionJapan-$4 trillion South Africa-$587 billionSouth Africa-$587 billion
What can the GDP tell you about a countries economic development? (Write your answer on your organizer)
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CAPTIALCAPTIAL
Resources that people use Resources that people use to make other goodsto make other goods
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Real World ExampleReal World Example
FactoriesFactories MachineryMachinery ToolsTools These are key for economic These are key for economic
growthgrowthIf you had a lemonade stand, what capital would you need for your business to be successful? (Answer on your organizer)
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Let’s review…Let’s review…
Use your Use your organizer to organizer to help you help you solve the solve the puzzle!puzzle!
Smart Notebook Review link