Latin America Government and Economics Study Guide Latin America Government and Economics

1-3. Define the ways government systems distribute power: Unitary, Confederation, Federal Power is held by one central authority. Confederation Independent states/countries band together for some common purpose. They only delegate a few powers to the central authority. By which they are giving up certain freedoms. States/countries retain considerable independence. Federal Power is divided between one central and several regional authorities.

4-6. Define the ways governments determine citizen participation: autocratic, oligarchic, and democratic Autocratic- One person possesses unlimited power. The citizen has limited, if any, role in government. Oligarchic- Government by the few. Sometimes a small group exercises control, especially for corrupt and selfish purposes. The citizen has a very limited role. Democratic- All citizens participate in the government

7. Describe the difference between parliamentary and presidential democracy Citizens elect members of parliament Those members choose a leader from among themselves to be the Prime Minister (PM) May have a monarch as the head of state Presidential Citizens SEPARATELY elect the members of the legislature and the President (chief executive) Most South American countries have this form of democracy

8. What are the types of government and economic systems of Brazil, Mexico, Cuba? Brazil- presidential democracy; mixed economy (closer to market) Mexico- presidential democracy; mixed economy (closer to market) Cuba- communist dictatorship; mixed economy (closer to command)

9. What are the 3 basic questions that all economic systems have to answer? What goods and services will be produced? How will the goods and services be produced? Who will get the goods and services?

10-12. Describe the following economic systems: traditional, market, command, mixed the customs and habits of the past make decisions Market- decisions are made by individuals Command- decisions are made by the government

13. What type of economic system do most Latin American countries have? Most Latin American countries have a mixed economy, closer to the market side

14. Where are Brazil, Cuba, and Mexico located on the economic continuum? 58% Cuba 28% Pure Command Pure Market Mexico 81%

15-17. Define GDP (Gross Domestic Product), human capital, and capital goods the total value of all the goods and services produced in a country in one year Human capital- human workers Education and healthcare

18-19. Define Capital goods and entrepreneurship Any tool that a worker uses to make another good. Examples: machines in factories, computers People who are willing to take risks in business

20. Describe the role of natural resources in a country’s economy Typically, if a country has natural resources, then the economy will do well. The country saves money because it does not have to import natural resources needed by the people

21. Explain how specialization encourages trade between countries If one country specializes in one item, then they can become masters at producing that item. Then, they can trade that really good item. Other countries then specialize in other items and trade those. Then the countries can trade and end up with good quality items after trading.

22-24. Define the following trade barriers: tariff, embargo, quota Tariff- tax on imports Embargo- a government order stopping trade with another country Quota- limit on the amount of goods let into a country

25. What is currency exchange rate? The price of one’s nation’s currency in terms of another nation’s currency Examples: $1=€1.37 1 Mexican peso=$0.079 1 Brazilian real= $0.567

26. What is the main purpose of NAFTA? Increase trade by creating a large free-trade zone

27. How does Latin America’s literacy rate effect its development? The higher the literacy rate the better the standard of living Latin America tends to have several countries with low literacy rates

28. How are countries economies affected by El Nino? Due to the world’s economic interdependence all countries would be affected by El Nino