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NAME________________________ DATE__________________ PERIOD_____________ Study Guide CA - European Economics 1. What is a command economy? AN ECONOMY CONTROLLED BY THE GOVERNMENT- THE GOVERNMENT MAKES ALL THE ECONOMICS DECISIONS, OWNS BUSINESSES 2. What is a market economy? An economy based on supply and demand- no government involvement. FREE ENTERPRISE! 3. What is a mixed economy? A mixture of command and market- free enterprise, but also some government involvement 4. What is a traditional economy? An economy based on the traditions of the past- they make what they’ve always made the same way they’ve always made it! 5. Write the definition and give an example of each Factor of Production Human Resources Definition Example The people that work and how skilled they are! Educated people, well trained people The tools you need to do a job Machines, factories, computers Resources you find in nature Trees, minerals, fossil fuels Capital Resources Natural Resources Entrepreneur A person who starts their own business 6. Why will a country that invests in human capital have a more successful economy? Investing in human capital (training, education) makes workers more productive and brings more money to the country 7. What are land, water, trees, fish, oil, and minerals examples of? Natural Resources 8. What is the total value of all goods and services produced in a country in one year? Gross Domestic Product=GDP 9. What do the economic systems of the United Kingdom, Germany, and Russia have in common? They are all mixed economies- they have some command and some market 10. What is a tariff? A tax on imported goods 11. What is a quota? A limit on the amount of goods you can import 12. What is an embargo? Means ABSOLUTELY NO TRADING! 13. Which of the following conditions must exist if two people want to engage in voluntary trade? Both have something the other person wants! 14. What is a free enterprise economic system? MARKET ECONOMY! Businesses make what the people want and they people decide if they want to buy it 15. Describe GDP. The total value of a country’s goods and services produced. 16. Why is it important for a country to invest in human resources? A country’s economy is more successful when workers have good education and health care. 17. How do entrepreneurs help increase a country’s GDP? They bring new ideas and jobs to the economy 18. In Germany, who decides which goods will be produced and sold? Businesses 19. What problems will occur in a country that does not invest in human capital? Workers will not be as productive 20. The European Union was formed to address common environmental problems, help to maintain peace, and promote what? Economic prosperity- wealth! 21. Based on the economic law of supply and demand, which will most likely happen when the supply of an item increases? If supply goes up, you have too many, so the price will lower 22. Short Answer: What is an entrepreneur? A person who starts their own business. They bring new ideas and jobs to the economy, which is good! A country wants entrepreneurs!