1. l
Economic Systems

2. Terms to Know Natural Resources Free Market Entrepreneur Command
Capitalism
Free Market
Command
Traditional
Mixed
Capital Resources
Land
Human Resources
Natural Resources
Entrepreneur
Trade Barriers
Tariffs
Quotas
Embargo
Currency Exchange
Specialization

3. Three Problems Every society has three problems:
1.How do we decide who gets what resources ?
2. Who uses which resources
3. What happens to those people who can’t get what they want, given limited resources?

4. Three Economic Questions
What and how much will be produced? . (Scarcity- A limited amount of materials to supply an unlimited demand)
How will it be produced? There are many ways to produce a desired item.
For whom will it be produced?

5. There are only FOUR TYPES
There are many words used to describe economics; but there are really only four types-Traditional, market, mixed and command.

6. Market Economy
An economic system in which individuals own and operate the factors of production. There are really NO complete market economies
AKA: Free enterprise, Capitalism
The closest is Hong Kong

7. Market Economies Resources are owned and controlled by individuals.
Economic decisions are made by individuals competing to earn profits
Individual freedom is considered very important
Economic decisions are made by the basic principals of supply and demand
Profit is the motive for increasing work rather than quotas.

8. Market Economies Also called capitalist economies
There are many economic freedoms
There is competition among businesses
Competition determines price which increase the quality of the product

9. TYPES OF ECONOMIC SYSTEMS
Definition
Associated Terms
Examples in Practice
1) Market economy
An economic system in which individuals own and operate the factors of production.
Free enterprise Capitalism
None really, Hong Kong is the closest
2) Command economy
3) Traditional economy
4) Mixed economy

10. Command Economy
An economic system in which the government owns and operates the factors of production.
AKA: Socialism, Communism
Cuba, Sudan, North Korea, Saudi Arabia

11. Command Economies
The government or other central authority makes decisions and determines how resources will be used Change can occur relatively easily There is little individual freedom. There is no competition Businesses are not run to create a profit

12. Command Economies Consumers have few choices in the market place
Factories are concerned with quotas
Shortages are common because of poorly run factories and farms.
The government dictates the job in which you work.

13. Command Economies
The government sets the prices of goods and services Examples of command economies: Cuba, North Korea and Vietnam

14. TYPES OF ECONOMIC SYSTEMS
Definition
Associated Terms
Examples in Practice
1) Market economy
An economic system in which individuals own and operate the factors of production.
Free enterprise Capitalism
None really=Hong Kong is the closest
2) Command economy
An economic system in which the government owns and operates the factors of production.
Socialism Communism
Cuba North Korea
Laos
3) Traditional economy
4) Mixed economy

15. Traditional economy
An economic system based upon customs and traditions. Economy is based upon agriculture and hunting.
Traditional economies are found in rural, non-developed countries
Some parts of Asia, Africa, South America and the Middle East have traditional economies
Customs govern the economic decisions that are made
Technology is not used in traditional economies.
AKA: Non-Industrialized, Agrarian societies
Chad, Haiti, Rwanda, parts of India, Indonesia

16. Traditional economy
Farming, hunting and gathering are done the same way as the generation before.
Economic activities are usually centered toward the family or ethnic unit
Men and Women are given different economic roles and tasks.

17. TYPES OF ECONOMIC SYSTEMS
Definition
Associated Terms
Examples in Practice
1) Market economy
An economic system in which individuals own and operate the factors of production.
Free enterprise Capitalism
None really, but Hong Kong is the closest
2) Command economy
An economic system in which the government owns and operates the factors of production.
Socialism Communism
Cuba Laos
North Korea
3) Traditional economy
An economic system based upon customs and traditions. Economy is based upon agriculture and hunting.
Non-Industrialized Agrarian societies
Chad Haiti Rwanda
Parts of Indonesia and India
4) Mixed economy

18. Mixed economy
Economy where the government and people both are involved in the running of the economy=has features of market and command.

19. People & Govt work together
Mixed Economies
Government and individuals share the decision making process Government guides and regulates production of goods and services offered Individuals own means of production Protects consumers and workers from unfair policies Most effective economy for providing goods and services
People & Govt work together

20. Command or Market Economies?
There are no simple Market or Command economies. Most economies have some government intervention like: minimum wages, social security, and regulatory policies are examples of government involvement. China maintains control of many of the factories, but today allows private ownership. The United States government allows private ownership, but controls wages and more

21. TYPES OF ECONOMIC SYSTEMS
Definition
Associated Terms
Examples in Practice
1) Market economy
An economic system in which individuals own and operate the factors of production.
Free enterprise Capitalism
Really none-closest is Hong Kong
2) Command economy
An economic system in which the government owns and operates the factors of production.
Socialism Communism
Cuba North Korea Laos
3) Traditional economy
An economic system based upon customs and traditions. Economy is based upon agriculture and hunting.
Non-Industrialized Agrarian societies
Chad Haiti Rwanda
4) Mixed economy
An economic system that has features of both market and command economies.
There are many nations that fall into this category, the United States, Japan, Britain, and Canada. There are no real associated terms/

22. Gross domestic product (GDP)b
The total amount of money that a nation makes in a year after expenses. GDP tells us how developed a nation is.

23. Gross Domestic Product Per Captia
For our purposes this year we will look closely at GDP per capita-or how much money a person makes in a year. This is always an average-total money divided by the population.

24. Factors of Production There are Four Types
Human Resources (Human Capital) Capital ($$$)
Natural Resources
Entrepreneur

25. Human Resources (Human Capital)
The health, education, experience, training, skills and values of people. Employees-humans needed because machines cannot do all the jobs.

26. Building a Workforce
How a country manages it productive resources makes a big difference in the strength of its economy. Investing in HUMAN CAPITAL will pay off for years to come. As humans increase their knowledge they are capable of completing more complex tasks which are more valuable to businesses. They can also make more $$$

27. Capital Resources
Resources made and used to produce and distribute goods and services: examples include tools, machinery and buildings

28. Natural Resources
“Gifts of nature” that can be used to produce goods and services. AKA: Land There are 2 types of natural resources: Renewable and Non-renewable. Natural resources includes soil timber, oil, minerals, and other goods taken more or less from the Earth.

30. Entrepreneur
One who draws upon their skills and initiative to launch a new business venture with the aim of earning a profit. Often a risk-taker, see opportunity when others do not.

31. Entrepreneur Why start your own business?
Profit is a company's earnings after all expense are paid.
Profit provides incentive for entrepreneurs. Making money, pride in your idea and product

32. Trade Barriers
A trade barrier is a general term that describes any government policy or regulation that restricts international trade. These barriers make sure that local businesses are not destroyed by foreign products. The barriers can take many forms, including: Quotas, Embargo, Tariffs

33. Tariffs A tariff is a tax on goods when they cross a national border.
A tariff makes sure that prices of foreign and local made products are competitive so that both sellers can compete.

34. Quotas
An import quota is a trade barrier that limits how many of a good can be imported into a nation at a given time. Quota’s protect local farmers and businesses and keeps competition alive.

35. Embargo
An embargo is the prohibition of trade with a certain country, in order to isolate it and to put its government into a difficult internal situation, given that the effects of the embargo are often able to make its economy suffer from the initiative. The embargo is usually used as a political punishment for some previous disagreed policies or acts.

36. Specialization or Division of Labor
Each person specializes in one occupation, to become the best at that job as possible, while others do the same with other occupations. Basically, it's a working society that does many different jobs. Example: A few people do farming, a few people do pottery, and a few people are blacksmiths. The society works together to make the society wealthier and more efficient.

37. Currency Exchange

38. Currency Exchange
Exchange rates are an important consideration when making international investment decisions. The money invested overseas incurs an exchange rate risk. Exchange rates have an affect on the economics of the nation.
Affects the prices of imported goods.
Affects the overall level of price and wage inflation.
Influences tourism patterns-people go where their $ is worth more
Will influence consumers’ buying decisions and investors’ long-term commitments.

39. Personal Money Management
Money is the medium of exchange to buy goods and services.
Your income provides you with money to spend on whatever you choose.

40. Personal Money Management
People use CREDIT to buy something now and pay for it later.
When you use CREDIT, you have to pay the amount you borrowed plus and additional amount of interest.
Banks make money from interest payments –
interest is a fee paid for the use of someone else’s money.

41. Making Your Money Grow!
Putting money in a bank or credit union can make you EARN interest.
Saving money allows you to increase your money by INVESTING.

42. Making Your Money Grow! Ways to Invest Your Money: Stocks and Bonds
Real Estate
Natural Resources
Collectibles
Business
(your own or someone else’s)

43. Supply and Demand

44. Study Island
Custom Material
Basic Economy Questions 20 questions

45. Bibliography
Federal Reserve of New York.
Retrieved March 13, 2009
Trading Around the World, Indiana Department of Ed