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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 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: 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) 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