Transcript introduce-economic-unit-m-e

Economic Dictionary
Unit 4
What motivates people?
 What
motivates people to get
things they want and need?
 $$$$$$
Economic system
 The
way in which a nation
uses its resources to satisfy
people’s needs and wants.
Real World Example

What will be produced?
How will it be produced?
For whom will it be produced?
What resources do we have?

The oil rich countries in the Middle East.



For example…


You go to the mall and want to buy a
DVD, t-shirt, & pair of shoes. You only
have $10.00 so you don’t have enough
resources (Money) to meet your wants
How people handle the problem of
satisfying unlimited wants with limited
resources
Command Economy
 The
government decides
what goods will be
produced, how they will be
produced, and how they will
be distributed
Real World Example
 Example-communist
countries
like Cuba and N. Korea
 -Workers get same pay so
poor quality of goods
 -little incentive for quality or
workers
Traditional Economy
Economic system in which
social roles (elders) and
culture determine how goods
are made, sold, and bought.
 Resources are determined by
inheritance, based on primitive
methods and tools

Real World Example
 subsistence
farming
 People produce most of
what they need to survive
 Common in poorer countries
 Carpet makers, hand made
crafts
Market Economy (capitalism)
 Based
on individual choices
and voluntary trade
 Free enterprise
 Individuals and business make
economic decisions
Real World Example
 Skill,
education and type of job
determine salary
 United States’ economy has a
large portion of market
economy
Mixed Economy
 Economic
system that has
features of traditional,
command, and market
Real World Example
 Most
countries are mixed
 United States- examples:
minimum wage (government
determines), quilts made by
the Amish (traditional) and
private owned businesses
(market)
Voluntary Trade
People trade freely
 Trade is the voluntary exchange of
goods, services, or both.

Real World Example
 One
country (US) decides to
trade with Japan
 Japan has products US
citizens want-electronic,
cars, technology
Trade Barriers
Any
law or practice that
a government uses to
limit free trade between
countries. Trade barriers
can be physical barriers
as well.
Real World Example
 Tariffs
(taxes) and quotas
 Embargos (US against Cuba)
 Physical barriers could be war
or landforms
Exchange Currency/Rate
 Amount
of one currency
that can be purchased for a
given unit of another
Real World Example



Money is currency
Value of currency between countries
changes -it affects the cost of goods
between countries
Ex: In Japan it costs more yen to buy an
Australian dollar so Japan pays more for
Australian products
Currency
 Money
in any form that is
accepted as a medium of
exchange, but specially
paper money
Real World Example
 Currency
is name of a country’s
money- it looks different and is
valued different
 Euro – the common currency of
most of Europe
 Saudi Arabia-riyal
 Israel-shekel
 Japan-yen
Entrepreneur
 Someone
who brings together
land, labor, and capital goods
to produce goods and services
Real World Example
 Business
owner who thrives
on free enterprise
 Bill Gates –Microsoft
 Walt Disney—Disney
animation company
(expansion)
Human Capital
 Knowledge
and skills that allow
workers to produce goods and
services and earn an income.
 People exchange their labor for
wages.
 Investing in their human capital
helps people earn higher wages
Real World Example
 College
education is human
capital
 Trained employees
 Japan’s greatest resource is
the skill of their people
GROSS DOMESTIC PRODUCT
(GDP)
 Total
market value of all goods
and services produced in a
country
Real World Example

U
U. S $13 trillion
Saudi Arabia $366 billion
Japan $4 trillion
Botswana $17 billion
What can the GDP tell you
about a countries economic
development?
CAPTIAL
 Resources
that people use to
make other goods
Real World Example
 Factories
 Machinery
 Tools
 These
are key for economic
growth