EconomicsEconomics

Economics Vocabulary ListEconomics Vocabulary List Command Command

EconomyEconomy Traditional Traditional

EconomyEconomy Market EconomyMarket Economy Mixed EconomyMixed Economy Voluntary TradeVoluntary Trade SpecializationSpecialization QuotasQuotas EmbargoesEmbargoes TariffsTariffs

Exchanging currenciesExchanging currencies Gross Domestic Gross Domestic

ProductProduct human capitalhuman capital CapitalCapital Investment in capital Investment in capital

and human capitaland human capital Foreign exchangeForeign exchange EntrepreneurshipEntrepreneurship Capital resourcesCapital resources

Types of EconomyTypes of Economy

Command - p.106 – The Command - p.106 – The government controls what is government controls what is produced and how it is produced and how it is produced in a command produced in a command system. The government owns system. The government owns the resources and decides the resources and decides

who gets the products.who gets the products.

TraditionalTraditional Traditional - p. 106Traditional - p. 106 This system is found in agricultural This system is found in agricultural

societies where people live the same societies where people live the same way their parents and grandparents way their parents and grandparents did. People in these systems produce did. People in these systems produce what they need to survive by farming what they need to survive by farming or hunting and gathering. They make or hunting and gathering. They make their own clothing and tools, and their own clothing and tools, and trade any extra food or items with trade any extra food or items with others in their society.others in their society.

MarketMarket Also supply and demandAlso supply and demand In a market system, a country’s In a market system, a country’s

economic decisions are based on what economic decisions are based on what its people want to buy and sell. People its people want to buy and sell. People can own their own businesses and can own their own businesses and produce what they want. In a market produce what they want. In a market economy, supply and demand for a economy, supply and demand for a good and service determines what to good and service determines what to produce and how to produce it. produce and how to produce it. Producers will make their product in Producers will make their product in the way that costs them the least the way that costs them the least amount of money so they can make a amount of money so they can make a profit.profit.

Mixed EconomyMixed Economy

It is making a transition from an It is making a transition from an almost completely command almost completely command economy to a market economy. economy to a market economy. Mixed economies fall between pure Mixed economies fall between pure market and command economies.market and command economies.

Voluntary TradeVoluntary Trade It happens when both parties expect It happens when both parties expect

to gain from the trade. The buyer is to gain from the trade. The buyer is happy purchasing an item at a good happy purchasing an item at a good price, while the seller is happy price, while the seller is happy making a profit.making a profit.

SpecializationSpecialization

Countries specialize in what they do Countries specialize in what they do best. Specialization is an efficient best. Specialization is an efficient way to work, and the cost of items way to work, and the cost of items produced is lower.produced is lower.

Trade Barriers and CorridorsTrade Barriers and Corridors

Tariffs – are taxes placed on Tariffs – are taxes placed on imported goods. Tariffs cause imported goods. Tariffs cause the consumer to pay a higher the consumer to pay a higher price for an imported item, price for an imported item, increasing the demand for a increasing the demand for a lower-price item produced lower-price item produced domestically.domestically.

EmbargoesEmbargoes Trade embargoes don’t allow trade Trade embargoes don’t allow trade

with another country. Countries can with another country. Countries can not import or export any items in not import or export any items in their country or out of their country.their country or out of their country.

QuotasQuotas

Quotas are restrictions on the Quotas are restrictions on the amount of a good that can be amount of a good that can be imported into a country. Quotas can imported into a country. Quotas can cause shortages that cause prices to cause shortages that cause prices to rise.rise.

Today’s Closing: Exit SlipToday’s Closing: Exit Slip QuotasQuotas EmbargoesEmbargoes TariffsTariffs Voluntary TradeVoluntary Trade SpecializationSpecialization Exchanging currenciesExchanging currencies Gross Domestic ProductGross Domestic Product human capitalhuman capital CapitalCapital Investment in capital and human capitalInvestment in capital and human capital Foreign exchangeForeign exchange EntrepreneurshipEntrepreneurship Capital resourcesCapital resources

Middle East Physical Middle East Physical BarriersBarriers

Foreign Exchange/Exchanging Foreign Exchange/Exchanging CurrenciesCurrencies

Money from one country must be Money from one country must be converted into the currency of converted into the currency of another country to pay for goods in another country to pay for goods in the country. the country.

Currency – the type of money a Currency – the type of money a country usescountry uses

Factors that influence Factors that influence economic growtheconomic growth

Human capital – people who perform Human capital – people who perform laborlabor

Capital – factories and machineryCapital – factories and machinery Natural Resources – things that come Natural Resources – things that come

from the land like minerals or treesfrom the land like minerals or trees Entrepreneurship – ideas, innovation, Entrepreneurship – ideas, innovation,

and risk involved in starting a and risk involved in starting a businessbusiness

Investment in……..Investment in……..

Investment in human capital – Investment in human capital – providing education and healthcare providing education and healthcare to workersto workers

Investment in capital resources – Investment in capital resources – factories, machinery, or technologyfactories, machinery, or technology

Gross Domestic Product Gross Domestic Product (GDP)(GDP)

Economists measure a nation’s Economists measure a nation’s economic performance by a economic performance by a standard called Gross Domestic standard called Gross Domestic Product (GDP). Economists use Product (GDP). Economists use it to determine the health of a it to determine the health of a company’s economy and company’s economy and compare it to other economies.compare it to other economies.