1. Economic Systems and Economic Growth

2. The production, distribution, and use of goods and services.
Economy
The production, distribution, and use of goods and services.
There are three main types of economic
systems:
1. Traditional
2. Command
3. Market

3. Traditional
What and How the goods/services are produced are based on customs
All goods/services are shared with all members of the economy
A community that uses a traditional economy relies on itself for all their needs
Example: an economy that hunts and gathers to survive

4. Command
The government decides what goods are made and how they will be made
The government decided who will receive the goods produced
There is no pure command economy in the world today
China is still partly command

5. Market
People are free to exchange good and services without government involvement or regulations
What is produced, how it is produced, and for whom it is produced is decided on solely by the person
There is no pure market economy in the world.

6. Mixed Is a mixture of command, and market economies
The United States has a mixed economy where individual ownership is encouraged but the government issues regulations.
Mixed
Pure
Market
Pure
Command

7. Gross National Product (GNP)
Gross Domestic Product
(GDP)
Gross National Product
(GNP)
The total amount of goods and service produced IN a country.
Per capita GDP is the GDP divided by the country’s population. This figure shows individual purchasing power and is useful in comparing levels of economic development.
The value of all goods and services that a country produces in one year.
It includes goods and services made by factories owned by the country but located in a foreign country.

8. Economic Growth
A measure of a nation’s growth in the output of goods and services.
Three key things that can affect a country’s economic status are government systems, political stability, and trade barriers
Main factors that influence economic growth are:
Natural resources
Human resources
Capital resources
Entrepreneurship
Trade with other nations .

9. Natural Resources
Supplied by nature and can be used to develop wealth for a society
Natural resources are a part of a nation’s GDP
Naturals resources influences a nation’s status in the world
The more natural resources a country has, the more economically developed the nation is.

10. Company invests in human capital through training and education
Human Resources
People are needed to make industry work
Human Capital – the value that people bring to the marketplace
The productivity of an industry can influence the economy as a whole for the better.
Company invests in human capital through training and education
Investments in human capital can increase productivity of the company and the industry
There is a positive correlation between Human Capital and Income
As a persons education level (human capital) increase their ability to produce income increases which has a positive impact on the country’s GDP.

11. Capital Resources
Capital goods – any goods or equipment used by a business to produce other goods
In a factory that makes sweatshirts, a capital good would be the machine that cuts the shirts.
The better and newer the capital goods, the more a business can grow.
Investing money in new technology (capital goods) helps businesses.
A country’s willingness to invest in capital resources can help increase their GDP.

12. Entrepreneurship
Entrepreneur – a person who is willing to take a risk to create a business to sell a new technique (way of doing something), idea, or product
These people are seen as business leaders and innovators trying new things
If a country has an increase number of entrepreneurs they will increase the country’s economic growth (GDP)

13. Trade with Other Countries
Many people today talk about fair trade
Fair Trade – the idea that practices such as underselling are unfair and should be stopped.
Underselling occurs when a company or industry of a nation sells products for less that the true market value in other countries.
This harms the economy (industries and companies) in the country where the products are exported.
To protect the countries and find a trade balance (when imports and exports are at a fairly equal level), trade barriers have been put into place in several countries.

14. Trade Barriers Tax – Tariff Quota – Quantity
Trade Barriers - economic or physical limits to what can be sold within a country.
There are three main types of trade barriers:
Tariff
Quota
Embargo
A tax placed on goods that are brought into a country
A limit on the quantity of goods and services that can be imported
A ban on trade with a country for political reasons.
Remember
Tax – Tariff
Quota – Quantity
(limit)
Embargo - Ban