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Transcript
Bell Starter
Export
Import
Comparative advantage
Tariff
Quota
Free trade
European Union (EU)
North American Free Trade
Agreement
 World Trade Organization
 Exchange Rate
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Balance of Trade
Trade Deficit
Trade Surplus
Market Economy
Per capita GDP
Command economy
Socialism
Communism
Mixed economy
Developing country
Traditional Economy
United States Economy
 The US has a market economy. Most
economic decisions are made by individuals
looking out for their own self-interests.
 The choices you make as a consumer affect
the products that businesses make & the
prices they receive for their products.
 A market economy is based on capitalism, a
system in which citizens own most means of
production. It is also based on free
enterprise, where businesses compete for
profit with a minimum of gov’t interference.
ECONOMIC SYSTEMS
 MARKET Economy:
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FREE ENTERPRISE
CAPITALISM -another name for the market economy
SUPPLY/DEMAND/PRICES
CONSUMERS MOST IMPORTANT
PRIVATE CITIZENS OWN FACTORS OF PRODUCTION
COMPETITION: INVISABLE HAND
EXTERNALITIES
HIGHER PER CAPITA GDP-divides the total GDP by county
population
ECONOMIC SYSTEMS
 COMMAND Economy:
 GOVERNMENT MOST IMPORTANT B/C IT MAKES
ALL DECISIONS
 SLOW GROWTH RATE FOR ECONOMY
 NO COMPETITION: LOW PRODUCTIVITY & LOW
QUALITY OF PRODUCTS
 NO INCENTIVE TO CREATE B/C GOVERNMENT
OWNS ALL NOT INDIVIDUAL
 CONTROLLED BY CENTRAL GOVERNMENT
ECONOMIC SYSTEMS
 MIXED Economy: (MOST ECONOMIES TODAY)
 INDIVIDUALS ACT FREELY
 SUBJECT TO CONTROL OF GOVERNMENT
REGULATIONS AND INTERVENTION
 USA: GOVERNMENT REGULATES ALL BUSINESSES
 USA: CONTROLS COMPETITION BY KEEPING FREE
UNDER SHERMAN AND CLAYTON ANTITRUST
ACTS
 PROTECTS PUBLIC INTEREST
TRADITIONAL ECONOMIES
 BASED ON:
 CUSTOM
 TRADITION
 WHAT YOUR FATHER DOES SO WILL YOU
 SELF SUFFICIENT
 SUBSISTANCE FARMING
United States Economy
(continuted)
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Incentives are rewards offered to try to persuade
people to take certain economic actions. Price,
bonuses for salespeople, & low credit rates for
consumers are incentives.
Competition forces businesses to use society’s
resources efficiently to produce goods & services
people prefer & to produce quality products at low
costs. Low production costs keep prices low for
consumers.
Gov’t can regulate businesses to make sure they are
following laws. ( Example: pollution output)
SCARCITY
 ALL NATIONS NO MATTER WHAT ECONOMIC SYSTEM
MUST ANSWER THE THREE BASIC ECONOMIC
QUESTIONS BUT THEY DO SO BASED ON THE
SCARCITY OF THEIR NATION’S RESOURCES.
 SCARCITY: OCCURS WHENEVER WE DO NOT HAVE
ENOUGH RESOURCES TO PRODUCE OR BUY ALL THE
THINGS WE WOULD LIKE TO HAVE
Making Wise Choices
 You make a rational choice when you buy
goods & services that you believe will best
satisfy your wants for the lowest possible
cost.
 Wise decision making by individuals also
benefits society by making the best use of
scarce resources.
 Being fully informed is the best way to make
the best economic decision.
RESOURCES
 CAPITAL: MONEY
 NATURAL: LAND WATER OIL
 HUMAN: PEOPLE