Download Sample Test Question What type of capital is an employee?

Economics
SS6E1a, SS6E5a, SS6E8a: Compare how
traditional, command, and market
economies answer the economic questions
of 1 – what to produce, 2- how to produce,
and 3- for whom to produce.
SS6E1b, SS6E5b, SS6E8b: Explain how
most countries have a mixed economy
located on a continuum between pure
market and pure command.
Economics
• Study of the production,
distribution, and use of
goods and services
• Every country has to decide
how to distribute its
resources to meet the needs
of its people. They do this
through an economic
system.
• Each economic system
answers 3 basic questions:
What to produce? How to
produce? For whom to
produce?
Traditional Economy
• A traditional economy is
based on customs and
traditions.
• Found in agricultural
societies where people live
the same way their parents
and grandparents did.
• People in these systems
produce what they need to
survive by farming, hunting
and gathering and usually
share with each other.
Command Economy
• The government decides
what goods are made
and how they are made.
• The government owns
the resources and
decides who gets the
products (may be based
on class, a reward
system, waiting in line,
etc).
Market Economy
• A country’s economic
decisions are based on
what its people want to buy
and sell.
• Supply and demand for a
good/service determines
what to produce and how
to produce it and what the
price will be.
• People can own their own
businesses and produce
what they want.
Mixed Economy
• A mixed economy has elements of traditional,
command, and market economies.
• Most countries today have mixed economies that fall
somewhere in between pure market and pure
command economies.
Free market
Hong Kong
U.S.A
Canada
United Kingdom
France
Japan
Poland
Mexico
China
Iran
Russia
Cuba
North Korea
Command
Where does the U.S. fall on this continuum? Which countries have the most government involvement in their
economies?
Sample Test Question
If a product is produced by hunting, based on customs
and shared by the whole community, in which kind
of economy is the product mostly likely being sold?
A. Traditional
B. Command
C. Market
D. Mixed
Sample Test Question
If a product is produced by hunting, based on customs
and shared by the whole community, in which kind
of economy is the product mostly likely being sold?
A. Traditional*
B. Command
C. Market
D. Mixed
Sample Test Question
Which of the following statements is the BEST
example of a command economy?
A. Anyone can easily start a company to sell
goods.
B. Anyone can make a profit from hard work.
C. The government controls the economy.
D. Traditional foods are gathered for sale.
Sample Test Question
Which of the following statements is the BEST
example of a command economy?
A. Anyone can easily start a company to sell
goods.
B. Anyone can make a profit from hard work.
C. The government controls the economy.*
D. Traditional foods are gathered for sale.
Sample Test Question
What is the most common economic system
today?
A. Traditional
B. Command
C. Market
D. Mixed
Sample Test Question
What is the most common economic system
today?
A. Traditional
B. Command
C. Market
D. Mixed*
GDP – Gross Domestic Product
• Total market value of the goods and services produced by a country’s
economy during a specific year.
• Economists use it to determine the health of a country’s economy
and its economic growth compared to other economies.
• Factors that influence economic growth (factors of production) are
human capital, capital goods, natural resources and
entrepreneurship.
Human Capital
• People needed to make industry work – Labor
• Investing in human capital (education,
training, etc) can lead to economic growth.
• This is why countries with higher literacy rates
tend to have higher GDP’s and vice versa.
Capital Goods
• Any goods or equipment used by
a business to produce other
goods are considered capital
goods.
• A business will invest money in
capital goods in order to make
their products faster or better =
economic growth
• Ex: Brazil has the highest GDP in
Latin America. Brazil also has
the highest amount of
investment in capital equipment.
Haiti is still mainly agricultural
with little investment in capital
equipment which contributes to
a low GDP.
Natural Resources
• Resources supplied by
nature that can be used
to develop wealth for a
society.
• A nation’s status in the
world is often
influenced by what
natural resources it has.
• They are the fuel for
industry and a source of
income when exported
to other countries.
Entrepreneur
• The person who takes on
the risk and possible reward
of operating a new business.
• Entrepreneurs come up with
new ideas and use human,
capital, and natural
resources to bring their
ideas to life – and to the
marketplace.
• Entrepreneurs are valuable
because they are creative
and help economies adapt
to changing conditions.
Sample Test Question
What type of capital is an employee?
A. Market capital
B. Government capital
C. Capital good
D. Human capital
Sample Test Question
What type of capital is an employee?
A. Market capital
B. Government capital
C. Capital good
D. Human capital*
Sample Test Question
An example of capital investment is?
A. Buying computers
B. Building an oil rig
C. Both
D. Neither
Sample Test Question
An example of capital investment is:
A. Buying computers
B. Building an oil rig
C. Both*
D. Neither
Sample Test Question
An example of a natural resource is:
A. school
B. oil
C. both
D. neither
Sample Test Question
An example of a natural resource is:
A. school
B. oil*
C. both
D. neither
Sample Test Question
When workers have the best tools, they can:
A. Be more productive
B. Help the country’s economy
C. both
D. neither
Sample Test Question
When workers have the best tools, they can:
A. Be more productive
B. Help the country’s economy
C. both*
D. neither
Sample Test Question
What is an example of investment in human
capital?
A. education
B. factories
C. highways
D. trucks
Sample Test Question
What is an example of investment in human
capital?
A. education*
B. factories
C. highways
D. trucks
Trade
• The exchange of goods and services
between countries.
• Countries trade goods because no
country has all the resources
necessary to efficiently produce
everything its people need.
• Exports: Goods sent to other
countries.
• Imports: Goods brought in from
other countries.
• Countries specialize in what they do
best. Specialization increases trade
because a country can get what it
needs at the lowest cost when
produced by someone who
specializes in producing that item.
Trade Barriers
• Limits to what can be traded to a
country.
• Governments try to use these
limits to protect their businesses
from foreign competition.
• Trade barriers include tariffs,
quotas, voluntary restrictions and
embargos.
• Trade agreements (such as NAFTA)
remove barriers and increase
wealth in countries in the
agreement.
Tariff
• Tax on imports.
• By taxing imported goods, a country can
protect the goods made in its own country.
• The tax will make an imported good cost
more.
Quotas
• Limits the number of goods that can be
imported from a certain country.
• Quotas can cause scarcity (limited supply of
something) that causes the price of the
imported good to rise.
Embargo
• Ban on trade with a certain country.
• The U.S. has a trade embargo with Cuba.
Currency
• System of money a
country uses.
• International trade
requires a system for
exchanging currencies
between nations.
• Money from one
country must be
converted into the
currency of another
country to pay for goods
in that country.
• The exchange rate is
how much one currency
is worth in terms of the
other.
Sample Test Question
A tax on imports is called a(an):
A. quota
B. tariff
C. embargo
D. sale
Sample Test Question
A tax on imports is called a(an):
A. quota
B. tariff*
C. embargo
D. sale
Sample Test Question
What is an advantage of specialization as a voluntary
trade benefit?
A. Factories cannot produce goods as quickly.
B. Workers do not become experts in their jobs.
C. A factory can produce more goods in less time
and for less money.
D. Businesses cannot sell as many types of goods
when they specialize.
Sample Test Question
What is an advantage of specialization as a voluntary
trade benefit?
A. Factories cannot produce goods as quickly.
B. Workers do not become experts in their jobs.
C. A factory can produce more goods in less time
and for less money.*
D. Businesses cannot sell as many types of goods
when they specialize.
Sample Test Question
Which of the following countries is NOT a part of
the North American Free Trade Agreement
(NAFTA)?
A. The United States
B. Canada
C. Mexico
D. Brazil
Sample Test Question
Which of the following countries is NOT a part of
the North American Free Trade Agreement
(NAFTA)?
A. The United States
B. Canada
C. Mexico
D. Brazil*
Sample Test Question
Which of the following BEST describes the
currency exchange rate?
A. It helps international trade.
B. It is a trade barrier.
C. It creates jobs overseas.
D. It never changes.
Sample Test Question
Which of the following BEST describes the
currency exchange rate?
A. It helps international trade.*
B. It is a trade barrier.
C. It creates jobs overseas.
D. It never changes.
Income
• Money that comes in for a person or business.
• For most people, income is money that comes
from getting paid to do work.
• Income may also come from gifts, from selling
something, or from savings/investments.
Needs vs. Wants
• People spend money on needs – things you
can’t live without (food, shelter, basic
clothing).
• People also spend money on wants –
something we would like to have but don’t
need.
Budget
• Plan for how much money will be spent on
each type of item that a person must buy.
• Following a budget helps people plan to have
enough money for necessities.
Savings
• Income not spent
• Saving money can allow people
to buy something expensive in
the future.
• One common way to save
money is to deposit it in a bank.
• In a bank, money earns
interest.
• Interest is a charge (fee) that
the bank pays to use the
deposited money.
Invest
• Spending money in the
hope of earning more
money than is spent.
• The biggest investment
most people make is a
home.
• Stocks and bonds are
small investments in large
companies.
• Every kind of investment
involves a level of risk.
Credit
• Borrowed money
• Someone who borrow
money from a bank
must pay interest to
them.
• It is important only
borrow money when
absolutely necessary
and to pay back
borrowed money as
quickly as possible.
Sample Test Question
John got a check for his birthday for $100. He wants to buy
a bicycle that costs $110. His father told him to put the
money into the bank where it will earn interest. This is
an example of which economic activity?
A. earning
B. saving
C. borrowing
D. crediting
Sample Test Question
John got a check for his birthday for $100. He wants to buy
a bicycle that costs $110. His father told him to put the
money into the bank where it will earn interest. This is
an example of which economic activity?
A. earning
B. saving*
C. borrowing
D. crediting
Sample Test Question
The BEST definition for “interest” is the?
A. Money you are paid to do work.
B. Money you pay to buy food.
C. Money you pay to borrow money.
D. Money that you pay for your rent.
Sample Test Question
The BEST definition for “interest” is the?
A. Money you are paid to do work.
B. Money you pay to buy food.
C. Money you pay to borrow money.*
D. Money that you pay for your rent.
Sample Test Question
Which of the following statements in the BEST
example of investing?
A. One person borrows money to buy a gift for
another.
B. One person works to earn money from another.
C. One person buys a home.
D. One person pays their phone bill.
Sample Test Question
Which of the following statements in the BEST
example of investing?
A. One person borrows money to buy a gift for
another.
B. One person works to earn money from another.
C. One person buys a home.*
D. One person pays their phone bill.