Economics is the study of how people make their money and a
study of choices. Which pair of shoes to buy the ones on sale or
the ones you really like, which cost much more. Whether to continue
saving your money for an IPOD you want, or to use some of it to go
to a movie Whether to give some money to a fundraiser for school or
to housing for the homeless.
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I. ECONOMIC SYSTEMS: All countries have an Economic System that
sets rules for their different methods of production and
consumption (buying and selling).
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Major Economic Systems There are three major economic systems:
traditional, market, and command. Most countries today use a mix of
these economic systems.
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Traditional Economy Economic decisions are based on customs and
beliefs. A barter system is normally used. People often grow their
own food and make their own goods.
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Market Economy (Also called: Free Enterprise/ Capitalism )
Individuals make decisions about what to buy and sell.
Characteristics also include private ownership of businesses,
competition, and free trade
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Command Economy Government owns businesses and decides what
goods and services will be produced and who will produce them. An
assembly-line worker works on the axle of a Moskvich car, made by
AZLK. Enterprises in the Soviet Union were more than just places of
work; they were responsible for a broad range of social welfare
functionsbuilding and maintaining housing for their workforces, and
managing health, recreational, educational, and similar
facilities.MoskvichAZLK
http://en.wikipedia.org/wiki/Economy_of_the_Soviet_Union
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Developed Countries Developed Country: Country with a strong
economy and a high quality of life. There is usually a lot of
freedom and openness in the economic system. Many of the worlds
wealthiest and most powerful nations are developed countries.
Examples: United States, Germany Many developed countries have a
combination of a democracy and a market economy. New York City, USA
Berlin, Germany
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Developing Countries Developing Country: Country with less
productive economies and a lower quality of life. These countries
often suffer from low technological advancements, high
unemployment, widespread poverty, and uneven distribution of wealth
and facilities (such as healthcare). Two-thirds of the worlds
people live in developing countries. Examples: Guatemala, Nigeria,
Afghanistan Lagos, Nigeria Market in Guatemala
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Developing Countries, continued Often, Developing Countries
have a large informal economya part of the economy based on odd
jobs that people perform without government regulation through
taxes. Example page 265 Many developing countries still have some
type of traditional economy, as many of the residents still live in
rural areas, or they are part of the informal economy. Venezuela's
informal economy
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Closed Economies A closed economy is a self-sustained economy
with no trading or business relations with any other economy
outside it. A closed economy has little exposure to the outside
world. A closed example would be North Korea A closed economy can
almost always be described as a command economy Often, the more
closed an economy is, the poorer the country.
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II.THE ECONOMY AND MONEY: People, businesses and countries
obtain the items they need and want through economic activities.
Countries differ in their amount of economic activity and the
strength of their economy.
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Consumer Person who buys goods and services. Goods Objects or
materials that humans can purchase to satisfy their wants and
needs. Services Any activities performed for a fee. Jobs in the
Service Industry include hair dressers, doctors, painters,
etc...
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GDP (Gross Domestic Product) The total value of goods and
services produced in a country in a year. Per Capita GDP GDP per
person in a country = One Year
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Currency Type of coin or paper money used in a country or
region.
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Barter System The exchange of goods and services for another.
(No currency is used.)
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The Law of Supply and Demand Supplyhow much of something is
available Demandthe amount of something consumers are willing or
able to buy In a Market Economy this law determines prices of goods
and services. Scarcity A condition of limited resources and
unlimited wants.
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Inflation Overall increase in the price of goods and services
across a countrys economy.
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Recession A decline in manufacturing, employment, and
sales.
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Depression A severe/long economic recession. X long time
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Industrialization The process of using machinery for all major
forms of production The production of crops or livestock
Agriculture
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Standard of Living A measure of how well people are living.
Determined by the amount of goods and services they can buy.
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Competition Rivalry between businesses selling similar goods or
services; often leads to lower prices
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Exports Goods or services a country sells and sends to other
countries Imports Goods or services that a country brings in or
purchases from another country Tariffs A tax added to imported
goods
