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Unit IV: Economics of SWA STUDY GUIDE! Complete the study guide, It COUNTS in your Notebook! RETURN to TEACHER with NB. Types of Economies Which type of economy answers each the following questions? (Traditional, Command, Market, or Mixed) 1. Technology is not important ____________Traditional______________ 2. Factories are concerned about quotas _____Command_________ 3. People, competing to make a profit, answer the 3 economic questions ___Market___________ 4. Profit motivates people to produce _____Market____________ 5. Found in rural, non-developed areas _______Traditional _________ 6. The people and the government decide how to answer the 3 economic questions ___Mixed_____ 7. Customs and traditions are base values ___Traditional______________ 8. Individuals can choose their own jobs _____Market___________ 9. What you produce depends on what the government needs _____Command_____________ 10. The government or central authority answers the 3 economic questions ___Command_________ 11. There is no competition between businesses ___Command____________ 1. 2. 3. 4. 5. 6. 7. 8. 9. 1. 2. 3. 4. 5. Economies of Israel, Turkey, & Saudi Arabia What type of jobs do most people in Iran and Saudi Arabia have? ___Oil Industry_________ What country has a lot of oil? ____Saudi Arabia________________ What country has very few natural resources? ____Israel________ What country has a lot of technology? _____Israel____________ Which country (or countries) has a mixed economy? ___Israel, Turkey & Saudi Arabia___________ What country has their largest product (petroleum) owned by the government? Saudi Arabia Israel has a mixed economy but is more _Market than Command____ on the continuum. Saudi Arabia is closer to ____Market _________ on the continuum. (market or command) Turkey has a mixed economy but is more __Market than _Command_____ on the continuum. Types of Resources: Name at least 5 natural resources _____Trees, Water, Oil, Diamonds, Coal________________ ________________________________________________________________________________ Name at least 5 capital resources ______Tractors, Computers, Factories, Vehicles, Tools______ ________________________________________________________________________________ Name at least 5 human resources ____Doctor, Teacher, Nurse, Policeman, Soldier____________ ________________________________________________________________________________ How can a country invest in human capital? __Build Schools (Education), Hospitals (Healthcare), Job Training_________________________________ ________________________________________ ________________________________________________________________________________ How can a country invest in capital goods? ____Build Highways (Trade), Build Shipping Docks (Trade), Factories__________________________________________________________________________ 6. Why would a country want to invest in human and capital resources? __Investing in human and capital resources gives countries better workers, better workers do more efficient work, create new products and contribute to a higher GDP, which leads to a higher standard of living. ____________________ ________________________________________________________________________________ Vocabulary Check - Make sure you know the meaning to the following words: 1. Entrepreneurship ___A person that risks capital to create a business or product. _________ 2. GDP __All the goods or services produced in a country in one year. __________________________ 3. Exchange rate _____The fair value of two different types of currency if they were traded for each other. Example: $1 dollar = 100 pesos__________________________________________________ 4. Specialization __When a country focuses on ONE product or good for world trade. Saudi Arabia=Oil__ 5. Command economy ____Government controls economy and answers the 3 economic questions._ 6. Market Economy __ People control the economy and answer the 3 economic questions.___________ 7. Traditional Economy _ Culture and Traditions control the economy and answer the 3 economic questions 8. Mixed Economy ___Government and People share control of the economy and answering the 3 economic questions.___________________________________________________________ 9. Trade _____Selling goods or products______________________________________________ 10. Imports_____Goods or Products brought INTO a country for trade or sale.________________ 11. Currency ____Money __________________________________________________________ 12. Literacy Rate _The percentage of people that can read and write at a 5th grade level in a country. Trade Barriers Tariff Tax on Imports Define it: Give an example: U.S. tax on imported cars (Toyota’s from Japan) Why would a country want this trade barrier? Toyota’s become more expensive than American made cars. Helps American car companies sell their cars at a lower price. Quota A Limit on the number of products. Embargo A block on all trade due to political reasons. U.S. says only 10,000 PlayStations (made in Japan) will be imported to the U.S. U.S. Government does not allow any Cuban products to be sold in the U.S. This allows X-Box (made by Microsoft/U.S. company) to be available at stores when PlayStations sell out. Helps American gaming companies sell more. U.S. Government does not like Communist Cuba. So U.S. money (from Trade) does not support governments that the U.S. does not agree with. Exchange Rate Exchange Rates make it much easier for countries to __________TRADE_________________________ Short answer 1. What are the 3 economic questions? What to produce? How to produce? For Whom to produce it for? 2. What is OPEC? (Confederation type of Union) Organization of Petroleum Exporting Countries, that works together for the common cause of controlling the world’s supply of oil. 3. The primary function of OPEC is to control the ___Supply__ of _Oil_ in order to control the _____Price_____ of __Oil_. Less Oil=More Demand for Oil, More Demand for Oil =Higher Price for Oil 4. What does specialization encourage? Specialization encourages TRADE, amongst countries or people that need products or goods from each other. 5. How does oil impact economies of SWA? Oil has created greater wealth (Higher Standard of Living) for some countries, but there is a disparity (difference) between countries that have oil (rich) and countries that do not have oil (poor). 6. What does low literacy rate tell us about an economy? Low Literacy Rate tells us that a country does not invest in its Human Capital which leads to a low GDP which results in a Low Standard of Living.