1. Economy

2. Economics is the study of how people manage and use their resources to meet their wants and needs.

3. The GDP (Gross domestic product) is a way to measure a country’s economy. This tells us the value of goods/services the country produces each year.

4. Producer: The person who makes/sells a product.
Consumer: the person who buys/uses the product.

5. Supply: The amount or availability of a product.
Demand: The amount of people who want a product.

6. Economic Scarcity: The difference in people’s wants and their resources.

7. Import: Goods that are manufactured in another country and brought into our country to be sold.
Export: Goods made in our country that are shipped to other countries to sell.

8. A tariff is a tax placed on goods just to come into the country to be sold.

9. FOUR types of economic systems:
Free enterprise/market economy
Command Economy
Traditional Economy.
MIXED ECONOMY!

10. Each system asks 3 questions:
WHAT TO PRODUCE? (What kinds of goods and services should be produced?)
HOW TO PRODUCE? (What productive resources are used to produce goods and services?)
FOR WHOM TO PRODUCE? (Who gets to have the goods and services?

11. Market: citizens and business owners are free to make their own choices about earning and spending money. Also known as a market economy or capitalism. (the government has little control in the day to day running of businesses)

12. Market Economy Who decides what to produce?
Businesses base decisions on supply and demand and free enterprise (PRICE)
Who decides how to produce goods and services?
Businesses decide how to produce goods
Who are the goods and services produced for?
consumers

13. Command: government decides how much of a product should be made, how its made and who sells it. Usually found in a communistic country.

14. Who decides what to produce?
Government makes all economic decisions
Who decides how to produce goods and services?
Government decides how to make goods/services
Who are the goods and services produced for?
Whoever the government decides to give them to

15. Traditional: social roles and culture determine how goods are made, sold and bought.

16. Who decides what to produce?
People follow their customs and make what their ancestors made
Who decides how to produce goods & services?
People grow & make things the same way that their ancestors did
Who are the goods & services produced for?
People in the village who need them

17. Mixed Economy Market + Command = Mixed
There are no pure command or market economies. To some degree, all modern economies exhibit characteristics of both systems and are often referred to as mixed economies.
Most economies are closer to one type of economic system. than another
Businesses own most resources and determine what and how to produce, but the Government regulates certain industries

18. Mixed Economy Who decides what to produce?
businesses
Who decides how to produce goods and services?
Businesses, but the government regulates certain industries
Who are the goods and services produced for?
consumers

19. A SPECIALIZED economy is found when a country produces or manufactures many things for sell.

20. An OVER SPECIALIZED economy is found when there is only one crop or good manufactured and sold in the country. (Example: Bananas on some Caribbean islands)

21. A country that has a high level of economic development will have citizens who are educated, in good health, earn decent salaries, the technology is advanced and there are many business owners.

22. A low level of economic development is found when there is few industries, low literacy rate and a low life expectancy.

23. Natural Resources – raw materials found in nature that are used to produce goods Human Resources – people’s knowledge, efforts, and skills used in their work Capital Resources – used to produce goods and services (buildings, materials, and equipment) Entrepreneurial Resources - recognize the need for new goods or service

24. International trade: Trade that occurs between two or more countries
International trade: Trade that occurs between two or more countries. This benefits both countries because they are able to get what they need from each other.

25. Free Trade: A trade agreement between two or more countries that allows each other to import their products without having to pay tariffs.

26. Embargo: A government placed ban on all products made from a specific country. (like CUBA – this means we do not sell or buy products from Cuba here in the US.)

27. Quota: A set limit on the amount of a product that can be imported to be sold.

28. Trade barrier: Any type of a restriction that will make trade more difficult. ( this can be quotas, embargos, lack of trade agreements, or even land issues like mountains or long distances.)

29. should be familiar with:
Savings Expenses
Currency Credit
Invest