2.  In every nation, no matter what the form of government, what the type of economic system, who controls the government, or how rich or poor the country is, three basic economic questions must be answered. They are:  What and how much will be produced? Literally, billions of different outputs could be produced with society's scarce resources. (Scarcity- In economics, scarcity is the problem of infinite human needs and wants, in a world of finite resources. ○ In other words, society does not have sufficient productive resources to fulfill those wants and needs  How will it be produced? There are many ways to produce a desired item. It may be possible to use more labor and less capital, or vice versa. It may be possible to use more unskilled labor to substitute for fewer units of skilled labor.  For whom will it be produced? Once a commodity is produced, some mechanism must exist that distributes finished products to the ultimate consumers of the product. The mechanism of distribution for these commodities differs by economic system.

3. Market economy  An economic system in which individuals own and operate the factors of production.  AKA: Free enterprise, Capitalism  United States, Great Britain, Japan

4. Market Economies  Resources are owned and controlled by individuals  Economic decisions are made by individuals competing to earn profits based on supply and demand  Profit is the motive

5. Market Economies  Also called capitalist economies  There are many economic freedoms  There is competition among businesses  Competition determines price which increase the quality of the product

6. Command economy  An economic system in which the government owns and operates the factors of production.  AKA: Socialism, Communism  Cuba, China, Laos, North Korea

7. Command Economies  The government or other central authority makes decisions and determines how resources will be used  There is little individual freedom  There is no competition  Businesses are not run to create a profit

8. Command Economies  Shortages are common because of poorly run factories and farms  The government dictates the job in which you work  The government sets the prices of goods and services

9. Traditional economy  An economic system based upon customs and traditions and agriculture and hunting.  Found in rural, non-developed countries  Customs govern the economic decisions that are made  Technology is not used in traditional economies.

10. Traditional economy  Farming, hunting and gathering are done the same way as the generation before  Economic activities are usually centered toward the family or ethnic unit  Men and Women are given different economic roles and tasks

11. Mixed economy  An economic system that has features of both market and command economies.

12. Mixed Economies  Government and individuals share the decision making process  Government guides and regulates production of goods and services offered  Individuals own means of production  Most effective economy for providing goods and services

13.  In reality there are no pure market economies, nor are there any pure command economies.

14. Gross domestic product (GDP)  is one of the measures of national income and output for a given country's economy. GDP is defined as the total market value of all final goods and services produced within the country in a given period of time (usually a calendar year).

15. Factors of Production  Capital  Resources  Entrepreneur  Land  Labor

16. Land  Land all naturally occurring resources whose supply is inherently fixed.

17. Labor (Human Capital)  labor is a measure of the work done by human beings.  Human capital is the people that work in the business.

18. Capital  Anything used to run the business: tools, tables, ovens and chairs

19. Building a Workforce  Investing in HUMAN CAPITAL will pay off for years to come  Train and educate your workers-helps a country’s economy

20. Natural resources  There are 2 types of natural resources: Renewable and Non- renewable.  Renewable – can be replaced. include soil, timber, minerals, and other goods taken more or less from the Earth.  Non-Renewable-resources that cannot be created again. Oil, gold and diamonds are examples.

21. Entrepreneur  An entrepreneur is a person who owns and operates a business, enterprise, or venture, and assumes significant accountability for the inherent risks and the outcome.

22. Trade Barriers  government policy or regulation that restricts or prevents international trade. The barriers can take many forms, including: quotas Tariffs Embargo

23. Tariffs  A tariff is a tax on goods imported into a country.  A "protective tariff" is intended to artificially inflate prices of imports and "protect" domestic industries

24. Quotas  An import quota is a type of protectionist trade restriction that sets a physical limit on the quantity of a good that can be imported into a country in a given period of time.

25. Embargo  An embargo is the prohibition of trade with a certain country, in order to isolate it and to put its government into a difficult internal situation, given that the effects of the embargo are often able to make its economy suffer from the initiative.

26. Specialization  Each person specializes in one occupation, to become the best at that job as possible, while others do the same with other occupations  Country focuses on producing one product  Basically, it's a working society that does many different jobs  Example: A few people do farming, a few people do pottery, and a few people are blacksmiths. The society works together to make the society wealthier and more efficient.

27. Currency Exchange  Exchanging one currency for another country’s currency

28. Currency Exchange Rate  The rate at which a country’s money is worth compared to another country

29.  Income - Money earned  Credit – Buy something now pay for it later  Savings – Not spending money, a budget, put money away  Investing – Do to make more money Example-401K

30. Tariff  Protective Tariff – A tax used to protect the businesses in a country from businesses in other countries