Download Frayer Model / Economic Understandings

Frayer Model / Economic Understandings/ Due: Monday, November 16th
Term
Scarcity
Economic system
Traditional economy
Command economy
Quota
Definition
This is the limited supply of something
Developed to determine how a country will use its limited
resources & answer the 3 basic economic questions 1) What goods
& services will be produced? 2) How will goods and services be
produced? 3) Who will consume the goods and services? The way
a society answers these questions will determine its economic
system.
The customs & habits of the past are used to decide what and how
goods will be produced, distributed, and consumed. What ever
position one is born into he/she will likely continue in that role
since jobs are handed down from generation to generation.
The government makes basic economic decisions. Individuals &
corporations generally do not own business or farms; these are
owned by the government. Workers are told what to produce &
how much to produce in a given time.
When a worker or corporation is told how much to produce in a
given period of time this is called a quota.
Free enterprise
Decisions are guided by changes in prices that occur between
individual buyers & sellers in the market place. In a market
economy individuals or corporations generally own businesses
and farms. Each business or farm decides what it wants to
produce.
Another name for Market economy
Capitalism
Another name for Market economy
Laissez-faire
Another name for Market economy
Law of Supply &
Demand
The law of supply & demand determines the price people pay for
things.
Supply
Supply is the amount of goods available
Demand
Demand is how many consumers want the goods.
Market economy
Sentence
Example
Free economy
The U.K. has a market economy and is considered one of the
freest economies in Europe.
Mixed economy
Since there are no pure command or market economies. All
modern economies have characteristics of both systems and are
then considered to be Mixed economies.
Trade barriers
When countries try to limit trade with other countries they will
create trade barriers by adding taxes (tariffs) or (quotas)
Tariffs
Taxes on goods come into a country.
Embargo
An embargo is a government order stopping trade with another
country. It might be put into place to put pressure on another
country for various reasons.
Free trade zone
When there are no trade barriers between countries. The European
Union has a free trade zone among member countries.
Currency
This is the money people use to make trade easier. The U.S. uses
$dollars, Russia uses rubles etc.
Gross Domestic Product
(GDP)
The GDP of a country is the total value of all the goods and
services produced in a country in one year. This helps determine
how rich or poor a country is.
Standard of living
The economic level in which people live
Human capital
To increase the GDP, countries must invest in human capital. This
means improving peoples economic level by making education
available, training, skills, and health care of the workers in a
business or country.
Physical capital
This would be investments needed to operate machinery,
technologies, buildings, and property needed by a business to
operate.
Entrepreneur
The person who provides the money to start and own a business is
called an entrepreneur. They take risks with their own money and
time because they believe their business ideas will make a profit.