Download Traditional economies have been historically found in

ECONOMICS
The social science that deals with
production, distribution and
consumption of goods and services.
economic system – the organized way that
a government answers the following questions:
What to produce?
How to produce?
For whom to produce?
Traditional economy –
economic decisions are based on custom
and habit.
Traditional economies have been historically
found in underdeveloped countries. Trading,
farming, hunting and gathering are used in
this type of economy. Believe it or not, this
economic system is still found today in parts
of South American, Asia and Africa.
Also called a planned
economy, the
government decides on
what to produce, how
to produce and for
whom to produce. It
tends to be poorly
organized and lack
quality control. China
used to be a command
economy but is now
allowing free enterprise.
Cuba, North Korea and
Myanmar are command
economies. What do
these countries have in
common?
command economy – a
system in which the
government makes the
major decisions
regarding the production
and distribution of goods
and services.
Market economy – a system in which consumers help
determine what is to be produced by buying or
not buying certain goods and services.
Unlike a command economy, supply
and demand is involved on deciding
on what to produce, how to produce
and to whom to produce. The US is
considered a market economy even
though there is no country that has
a total market economy. Why do
you think that is?
mixed economy – a combination
of command and market
economies.
market
command
Iran? China
?
USA?
Truth is…economies are always changing!
Southwest Asian Economies
market
command
Turkey
Saudi Arabia
Iran
Israel
Warm-up Tuesday, 11/19/13
Who makes most of the important decisions
in an oligarchy?
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AGENDA:
Finishing economic terms
OPEC/Supply and Demand
ME Economy: Human Capital and Capital
Goods
• ME graphs
Announcement: Government Quiz tomorrow
Trade
The exchanging of goods and services
• specialization – products a country makes best
and that are in demand on the world market.
• trade barrier – anything that restricts trade
from one country to another.
• tariff – a tax on imports or exports
• quota – a limit on how many products can be
imported
• embargo – a halt to trade with another country
or group of countries
OPEC
• OPEC was established in 1960 by five original member countries:
Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela and has since been
joined by others. The expressed purpose of the organization is to
see that global oil prices remain fair and stable, allowing member
nations to earn needed money from the sale of their oil. They do
this by adjusting their petroleum production to help maintain a
balance in supply and demand. OPEC ministers meet at least twice
yearly to make decision about members’ oil production levels.
currency – something that is used as exchange;
money
exchange rate – a system of changing from one
type of currency (money) to another
capital goods – Items that are used to produce
something. Ex: machinery, computers,
factories
human capital – the set of skills which an
employee acquires on the job which increase
that employee’s value in the marketplace
literacy rate – The amount of people who can read
and write in a country.
per capita – for each person
standard of living – the degree of
wealth and material comfort that
is available to people.
infant mortality – the death of
children under one year of age.
life expectancy – the time period that
a person is expected to live.
gross domestic product (GDP) – the
total market value of all goods
and services produced by a
country during a specific time
period.
entrepreneur – an individual who
starts their own business