Transcript Economics
With your group, come up with a definition for the term “economy”. Economy: Production or exchange of goods and services by a group › Goods: things to be traded, bought, or sold › Services: work done in exchange for payment › Labor: work force, the workers Custom and tradition determine what should be produced Goods and services are exchanged without money; Change and growth proceed very slowly Often there is no private property; things are owned by the family or village Goods and services are produced to meet the needs of the members of the family/tribe Very little outside trade Also called “Barter” All important economic decisions are made by government leaders, including production of goods and services Cooperation is supposed to replace competition, allowing everyone’s needs to be met; goal is to achieve a classless, equal society Citizens can be assigned or strongly encouraged into various employment Private property ownership is abolished and replaced by national ownership of all land, factories, farms, and major resources Also called “planned economy” or “communism” Goods and services are determined through supply and demand; individual decisions on what to buy or sell People are free to take part in any business, buy any product, or sell a legal product. Private ownership of businesses and land; private investment The government only provides and enforces a set of common rules, maintains monetary system, and will sometimes break up or regulate companies that could defy market forces Also called “free market economy” or “capitalism” Combination of command and market economies Mixed amounts of government control and private ownership Example: Canada, most European countries Traditional Economy What is it? What role do citizens play in economy? Country/ Example Command Economy Market Economy Mixed Economy Make sure to highlight, underline, circle, and summarize your notes. Comparisons Subsistence Agriculture growing only enough to feed the farmer and his family. There is rarely a surplus so very little is sold or traded. Economic growth is slow. Commercial Agriculture farmers grow food not just for themselves, but in order to sell it to others for cash. Crop production is intended for distribution to wholesalers and retailers, such as supermarkets and grocery stores. Large scale makes production cheaper. Mechanized equipment is used over large tracts of land. Comparisons Cottage Industries people use their spare time to weave cloth, make furniture and clothes. Producing goods by hand. Help farmers and their families meet their needs and may give them extra income during the winter months. The entire family works together. Commercial Industries goods are manufactured in factories for sale throughout the country or overseas. Gathering raw materials like natural resources taken from the Earth › Examples: mining, fishing, farming, agriculture, forestry Manufacturing and Industry › Converts raw materials into new products › Adding value to raw materials by changing their form › Example: food processing, manufacturing, refining › Found: near markets to serve customers, where special manufacturing needs can be met, where the government creates the industry Service Industries like business or professional services › Example: retail salespeople, doctors, hair stylists, manicurists, health care, banking Provide information processing, research, or management by highly trained professionals › Example: store managers, scientists, computer programmer, legal services, professorships Wood from tree is manufactured into a toothpick 2. Executive for toothpick Company wants to create a toothpick that is cheaper to produce and lasts longer 3. Toothpick is advertised (marketed) and sold at H-E-B by a sales employee. 4. Lumberjack chops down the tree 1. Create an illustration depicting each economic activity. › Make sure to label economic activity AND color your pictures. Demographic Indicators Birth Rate Death Rate Infant Mortality Rate Fertility Rate Life Expectancy › The average number of years an individual in a country is expected to live; related to the country’s level of poverty How do these indicators apply to more and less developed countries? Economic Indicators Economic indicators tell how well an economy is performing More developed countries will have: › › › › › Higher GDP / GNP Higher per capita income Higher standard of living More trained professionals such as doctors Workers’ productivity depends on machinery, computers, and other high-tech tools › Average number of technological appliances: automobiles, telephones, televisions, computers Social Indicators Social indicators concentrate on the social services provided by countries for their citizens Some indicators that are considered: • Literacy rates (percentage of people who can read and write) • Percentage of people attending colleges and universities • Number of working professionals • Quantity and quality of housing • Water supplies • Sanitation Political Indicators • Political indicators include: • Freedoms people enjoy • The degree of democracy and voting rights • The level of human rights, • The degree of government oppression and, • Tolerance for different points of view. • There is no direct relationship between economic development and a nation’s system of government. • Some more-developed economies have been ruled by dictators while, • Some democracies are less developed countries. DEVELOPED Also Called Industrialized Why? › Form of government (democracy) DEVELOPING Also Called Third World Countries Why? › Undeveloped industry › Free market economy › Lack modern technology › Lack of corruption › Low levels › More dependent on manufacturing than agriculture › Prevalent technology Examples › United States › Japan › Germany › France Education Healthcare Life expectancy Examples › Mexico › Brazil › South Africa › Thailand