Unit 2C: Africa’s economics Study Guide Review

SS7E1 Compare how traditional, command, and market economies answer the basic economic questions: WHAT TO PRODUCE, HOW TO PRODUCE, & FOR WHOM TO PRODUCE. WE HAVE HAD THIS STANDARD ALREADY…IT IS REVIEW!!!!

Number 1: The Chart Decisions made from customs and traditions Traditional Command Decisions made from customs and traditions Goods are usually produced for personal use Subsistence Farmers BARTERING & TRADING IS THE STANDARD PRACTICE EVERYTHING is planned by the government NO PRIVATE BUSINESS NO ENTREPRENEURS

Number 1: The Chart The “market” makes the decisions Buyers are the market Sellers are the market Entrepreneurs are the market Individuals experience profits and losses

#2: Why are most countries MIXED? All countries have some amount of government control. All countries have some amount of private ownership

#3: What is an ECONOMIC CONTINUUM? A scale that SHOWS where a country’s economic system lies between PURE MARKET & PURE COMMAND COMMAND mARKET

#4: Compare & Contrast the economic systems of Nigeria & South Africa. Some government control Strong economy Goods: platinum, diamonds, gold Exports: gold, diamonds, minerals GDP/capita: $10,700 Unemployment: 23.4% Economic Freedom Index: 70- MODERATELY FREE Poorly organized Some private ownership Goods: Oil & Petrochemicals Exports- Oil & Petrochemicals GDP/capita:$2,400 Unemployment: 21% Economic Freedom Index: 116- MOSTLY UNFREE

#5. What type of economic system do both countries have? Mixed #6. What is S. Africa’s main economic problem? Unemployment- almost ¼ of the population is not working

#7. Where are they on the continuum? P U R E M A K T P U R E C O M A N D S O U T H A F R I C 7 N I G E R A 1 6 U S A 10 0 179

Another continuum

#7. Why put them there? South Africa- has more private ownership and less government control Nigeria- just beginning to allow private ownership Problems with government corruption- Oil industry

SS7E2: TRADE #8. 3 TYPES OF TRADE BARRIERS: TARIFF, QUOTA, & EMBARGO #9. How are they different? They all limit trade but in different ways #10. Importance of specialization in international trade- NO country is COMPLETELY self-sufficient; they can’t produce ALL goods and services they need so they have to TRADE with each other

SS7E2: TRADE #11. Voluntary Trade- It promotes SPECIALIZATION which usually leads to better production and more profits; this increases the GDP #12. Tariffs helping the economy- Tariffs discourage people/businesses from buying imported goods b/c the prices will be higher from tariffs. Tariffs, therefore, encourage buying domestic goods for lower prices

SS7E2: TRADE #13. Embargoes against South Africa- The United Nation’s members STOPPED trade with South Africa until they ENDED APARTHEID. SS7E2b #14. CURRENCY- is money #15. EXCHANGING CURRENCIES- is needed to make sure that the money has a dependable value and the trade is fair

SS7E3a Human Capital #16. Investing in HUMAN CAPITAL- by training and educating the workers #17. Effects of investing in human capital on GDP- the more countries invest in training and skills of workers, the higher the profits; the higher the profits, the more valuable to goods and services; this INCREASES the GDP. #18. South Africa invests in HUMAN CAPITAL- by making sure the mine and electronics workers are well trained.

SS7E3a #19. Why SHOULD Nigeria have a strong economy? b/c they have a lot of oil and a system of education so the GDP/capita should be higher #20. Not investing in Human Capital- if workers are unskilled they will not make a good income and will not spend money on buying goods and services~ which puts money into the economy

SS7E3b: Capital Goods #21. South Africa’s investment in capital goods- spending money on new technology and equipment for mining and the auto industry #22. Nigeria’s investment in capital goods- they have spent SO MUCH money for new technology for oil production that they have not spent $ on agriculture. 70% of the people work in agriculture and live on less than $1/day

Capital Goods #23. Importance of investing in capital goods- good technology increases production; more production increases profits; higher profits increase the GDP #24. Nigeria’s investment in capital goods- has left no $ for MOST of the people; poor food supply and housing

SS7E3c #25. Uses of Uranium- nuclear weapons, nuclear energy, photographic chemicals #26. The World’s Uranium Supply- 20% is in Africa #27. Negative Effects of Nigeria’s economic development- Oil has not strengthened the economy #28. Why?- most of Nigeria’s money goes into the oil industry. 80% of the people are not in the oil business

Africa’s Resources #29. Africa’s most valuable resources- Diamonds and gold #30. Why haven’t S. Africa’s diamonds been ‘bad’? Strict regulation of the diamond business- no ‘blood diamonds’ from S. Africa #31. Effects of Conflict Diamonds- Conflict diamonds are sold illegally to provide weapons for rebel groups / conflicts/ wars; supports chaos and killing

RESOURCES #32. South Africa’s gold- 40% of the world’s gold is found there #33. Effects of S. Africa’s gold- They have been able to use the $ to provide some resources for people but not enough for AIDS/HIV #34. Entrepreneurs- takes financial risks to have new business; THEY reap profits & losses of the risks #35. Influence of entrepreneurs influence economic growth- they create new jobs which increases the GDP, unless the business fails