Economic Systems

Mixed

Few countries have a pure market OR a pure command economy Few countries have a pure market OR a pure command economy. Instead they are a mixture of both. This is because if it is mixed more towards a free-market, there is little government regulation. People could take advantage of that. If it is mixed more towards a command economy, the government control may keep the economy from growing.

Command

Government tells you what to produce, how to produce it, and who to produce it for. (not very successful- think North Korea)

Market

Consumers and supply and demand tell companies what to produce, how to produce it, and who to produce it for. (best to raise a country’s standard of living- guided by changing prices!)

Traditional

Tradition, ritual, and custom tells people what to produce, how to produce it, and who to produce it for.

Trade Barriers

Embargo

Restriction of Trade for political purposes Restriction of Trade for political purposes. An attempt to punish or manipulate a country for doing something wrong.

Quota

a limit on the amount of goods that can be imported from a certain country. protects local manufacturers and producers, balances trade and limits competition

Tariff

a tax on imported goods a way to discourage a country's consumers from buying products from another country and to support domestic products and services.

Factors of Production

Human Resources

Labor, skilled workers- the people that it takes to make an economy work AKA- human capital education, skills and experience

Natural Resources

Gifts from nature that help make an economy grow

Capital Resources

Tools, machinery, technology used to make and economy grow

Infrastructure

The basic equipment and structures (such as roads and bridges, power plants, buildings) that are needed for a country, region, or organization to function properly (capital goods)

Entrepreneur

A person with an idea who takes risks to start a business in order to make a profit- *important to economies because they create jobs

Specialization

When a country does one thing very well, and trades with other countries to get the rest

Gross Domestic Product (GDP) and GDP (per Capita)

The total market value of all goods and services produced in a country in a year- GDP per capita is the division of the GDP by the total population

Currency Exchange (Why do we have a system of currency exchange?)

It allows us to consistently express the value of an item across borders. Need exchange rates because one nation's currency is not always accepted in another.

Standard of Living

the necessities, comforts, and luxuries enjoyed or aspired to by an individual or group

Literacy Rate

Total is the percentage of the population age 15 and above who can, with understanding, read and write a short, simple statement on their everyday life.