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CDA # 4 STUDY GUIDE—
Environmental & Economic Forces in Latin America
SS6G2: The students will discuss environmental issues in Latin America
I. Air Pollution in Mexico City, Mexico
*How does the geography of Mexico City plays a role in the city having bad air pollution problems? Mexico
City is built in a bowl-shaped crater/basin surrounded by hills and mountains.
*What is the major source of air pollution in Mexico City? exhaust from cars and factories
II. Oil-related Pollution in Venezuela
*What is Venezuela most important natural resource? Oil (petroleum)
*How does oil/petroleum plays a part in Venezuela’s pollution problems? Oil pollutes the water and land.
Also, smoke from the oil refineries/factories pollutes the air
III. Destruction of the Rain Forest in Brazil
*What is deforestation? Cutting down large areas of the forest and haul away the trees.
*Why do farmers cut down the rain forest in Brazil? raise cattle, grow crops, and sell the timber/trees
SS6E1: The student will analyze different systems
IV. Compare and contrast the types of economic systems found in Cuba, and Brazil
*Cuba has which type of economic system? Command
*What sources of income helps Cuba’s economy? sugarcane and tourism
*Brazil has which type of economic system? Mixed/Market
V. Compare how traditional, command, and market economic systems answer the three basic economic
questions of 1)What to produce 2)How to produce 3For whom to produce
READ! Every country must develop an economic system to determine how to use its limited resources to
answer the three basic economic questions:
Three Basic Economic Questions:
*1. What goods and services will be produced?
*2. How will goods and services be produced?
*3. For whom the goods and services will be produced?
The way a society answers these questions determines it economic system. There are types of economic
systems exist to answer these questions: traditional, command, and market.
***a) What is a Command Economy? In this system, the government decides how many of which goods are
produced and set the prices. Cuba has a command economy.
b) What is a Traditional Economy? In this system, social roles and cultural traditions play a major role in
determining how goods and services are produced, what prices and individual incomes are, and people barter
for goods or services they need.
c) What is a Market Economy? An economy in which business owners make most economic decisions.
Business owners control the factors of production. The government plays a very limited role.
***d). There are no pure command or market economies in any country; therefore, most countries’ economies
have characteristics of both systems and are considered mixed economies.
e). For example the following diagram shows some world economies on a scale. The countries on the left are
most restricted in economic activities and the ones on the right are most free in economies activities.
MIXED ECONOMY CONTINUUM
Command Economy
Cuba
Market Economy
Venezuela
Mexico Brazil
Canada
f) Now, take a look at the mixed economy continuum. Which type of government does Brazil have? You are
correct; the answer is Federal (which is a democratic form of government)
g) Remember, the only country with a mixed economy CLOSEST command and autocratic government in the
Latin America and the Caribbean is Cuba
VI. Most countries in the world have which type of economic system? Mixed
SS6E2: The student will give examples of how voluntary trade benefits buyers and sellers in Latin
America and the Caribbean
VII. How Specialization Encourages Trade between Countries
What is Specialization? = A worker who is trained with the necessary skills and becomes the expert in
performing a job. Some advantages of specialization is: the worker becomes an expert, the job is performed
faster, costs to make goods are reduced, and the business runs better
VIII. 3 Types of Trade Barriers
*What is a trade Barrier = A Trade Barrier is any law or practice that a government uses to limit free trade
between countries. The 3 types of trade barriers are: Embargo, Quota, and Tariff
*Types of Trade Barriers:
1) Quota = Quota is a limit on the amount of a product that may be imported during a given period of time.
2) Tariff = A Tariff is a fee/tax charged for goods or services brought into a state or country from another
state or country.
3) Embargo = Embargo is a type of trade barrier in which a government places restrictions on the import or
export of certain goods. Embargoes often are backed by military force.
IX. (North American Free Trade Agreement (NAFTA)
*The North American Free Trade Agreement (NAFTA) is an agreement to eliminate trade barriers and tariffs
between what three countries? Mexico, Canada, and United States
X. How International Trade Requires a System for Exchanging Currencies
*What is the Foreign Exchange Market? A place where money from different countries is exchanged because
companies that want to buy products from another country need currency from that country. Also, the
foreign exchange allows people who trade or buy things from other countries to exchange their currency to
the currency of another country
*Why is the foreign exchange market important (exchanging of currencies)? It determines the value of a
country’s currency and it makes trade between countries easier
SS6E2: The student will describe factors that influence economic Growth and examine their presence or
absence in Lain America
XI. Relationship Between Human Capital and Gross Domestic Product (GDP)
*Human Capital = Human Capital is the knowledge and skills that allow workers to produce goods and
services and earn an income.
*Gross Domestic Product (GDP) = The total value of all the goods and services produced in a country in one
year. The GDP is one way to tell if a country is rich or poor.
XII. Relationship Between Investment in Capital and Gross Domestic Product
*What is the relationship between investing in human capital and GDP? Workers with the knowledge and
skills will be able to find a job to produce goods and service. The workers will earn and spend their
income/salary to buy goods and services they need from other businesses. This will cause the Gross
Domestic Product (GDP) in the country to increase. This is good for a country’s economy.
XIII. Role of Natural Resources
*What is the role of Natural Resources? materials to manufacture goods (examples of natural resources are
land, water, forests, minerals, soil climate)
XIV. Role of Entrepreneurship
What is the role of an entrepreneur? = Entrepreneurs create jobs which helps the economy!
These people start a business, and bring natural resources, labor, and capital resources together to produce
goods and services.