ECONOMICS SS6E2 a. b. d. SS6E1 a. b.

1. ECONOMICSSS6E2 a. b. d. SS6E1 a. b.

2. ECONOMICS • What does this term mean? • What are some words that come to mind when you hear this word? • What are some economic decisions that people have to make? • How does economics affect us in our daily lives? • Who does economics affect?

3. What is Economics? • Economics is the study of how people make decisions in a world where wants are unlimited but resources are limited.

4. What are the 3 economic questions? • WHAT is produced? • HOW is it produced? • WHO consumes what is produced? (Or, FOR WHOM is it produced?)

5. What is an economic system? • An economic system deals with the production, consumption, and distribution of goods and services in a society.

6. Traditional • Based on customs and traditions • Use hunting and agriculture • Community relies on itself for all needs

7. Command (Communism, Socialism) • Government owns ALL industry • Government provides all goods and services the people need • Government determines what is produced, price and wages

8. Market (Capitalism, Free Market) • Businesses are privately owned • Workers produce goods and services • Workers paid from profits as determined by owners

9. Mixed Economy • Combines elements of command and market systems **ALL COUNTRIES HAVE A MIXED ECONOMY!!**

10. Economic Continuum • Where do you think Mexico, Brazil, and Cuba would be on this line?

11. Trade Barriers • “Trade” is exchanging one good/service for another good/service. • A “trade barrier” is when countries restrict trade because they want to produce and sell their own goods. • Tariff – a tax on an imported good that causes the consumer to pay a higher price for the imported item • Quota – a restriction on the amount of a good that can be imported into the country • Embargo – forbids trade with another country

12. Other Economics Terms • Specialization – being really good at making one or more things • Goods – something you make • Services – something you do • Imports – goods being brought in from another country • Exports – goods you’re sending to another country • Currency – type of money a country uses to buy goods and services • Foreign exchange – money converted from one country into the currency of another country • Foreign exchange rate – math equation used to convert that money

13. Essential Question • Why do we need a foreign exchange rate?

14. Economic Growth Factors There are FOUR economic growth factors that affect GDP. When you invest in these factors to help them grow or become better, GDP goes up! • GDP = Gross Domestic Product = total value of the production of goods and services in a year • GDP Growth Rate = how much that value has changed since the year before (%) • GDP Growth Rate shows whether a country’s economy is growing or not.

15. Economic Growth Factors • Human capital – the people working to produce goods and services • We invest in human capital through education and training. How “good” human capital is can be partly shown by the literacy rate. • CubaLiteracy Rate— 99.8%Real economic growth rate (2008 est.): 4.3% • BrazilLiteracy Rate— 88.6%Real economic growth rate (2008 est.): 5.2% • Based on the GDP Growth Rates above, what might have happened to these countries’ literacy rates recently? • Remember: Literacy rate increase = better human capital = higher GDP Literacy rate increase = greater standard of living

16. Economic Growth Factors 2. Capital = manmade things that help us work What are some examples? How can we invest in capital? • Cuba Capital Investment— 11.6% of GDP (2008 est.) Real growth rate: 4.3% (2008 est.) • Brazil Capital Investment— 18.6% of GDP (2008 est.) Real growth rate: 5.2% (2008 est.) Based on the data above, why might these countries’ GDPs have grown so much that year?

17. Economic Growth Factors 3. Natural resources = resources that come from nature • The more natural resources you have, the more products you can make, and the more GDP grows!

18. At the top of your page, write “South America Natural Resources”; then, answer these questions: In which country do you think coffee most contributes to GDP growth? In which country do you think oil and natural gas most contribute to GDP growth? In which country do you think fishing most contributes to GDP growth? In which country do you think natural resources as a whole contribute most to GDP growth?

19. Economic Growth Factors 4. Entrepreneurship = An entrepreneur is a person with an idea for a good or service who is willing to take risks to produce it. • The more freedom people have to start businesses, the more businesses will be started, and the more goods will be produced! • Does this raise or lower GDP?

20. Cuba • Based on information from the Economic Freedom Index (EFI), the overall freedom to start, operate, and close a business remains constrained by state interference. As the government virtually controls many aspects of economic activity, only limited private entrepreneurship exists. Inconsistent and non-transparent application of regulations impedes the creation of dynamic entrepreneurial activity. Cuba’s rating for Business Freedom= 10; the world average= 64 (2009). Brazil • Based on information from the Economic Freedom Index (EFI), the overall freedom to start, operate, and close a business is limited by Brazil's regulatory environment. Starting a business takes about four times the world average of 38 days, and obtaining a business license takes more than the global average of 225 days. Closing a business is difficult. • Does it sound like entrepreneurship contributes much to GDP growth in these countries? • What are some things we can do to encourage entrepreneurs? Why is this a good idea?

21. GOVERNMENTSS6CG1 a. b. c.

22. Government Systems • Federal – power is divided between the central government and smaller political authorities • Unitary – all power is given to the central authority • Confederation – a loose alliance of countries/political units; the central government only makes decisions on issues that affect the entire confederation

23. Citizen Participation • Autocratic – one leader holds complete power; citizens do not participate • Oligarchy – control rests with a small group of people with wealth or power; citizen participation is limited to the ruling group • Democracy – people hold supreme power; usually through voting • Representative Democracy/Republic – citizens vote for representatives in their government

24. Citizen Participation • Presidential Democracy – the head of government is elected by the people,separate from the legislature • Parliamentary Democracy – the head of government is the leader of the political party that has the most members in the legislature (parliament) • Head of government – government leader who manages the day-to-day activities of the government • Chief of state – government leader who represents the country at official functions; may not be involved with day-to-day activities • In a presidential democracy, these two are normally the same person! In parliamentary, they’re usually different!

25. POP QUIZ! Number your paper 1-25

26. Economics, traditional, command, market, mixed, trade, trade barrier, tariff, quota, embargo, specialization, currency, foreign exchange, foreign exchange rate, federal, unitary, confederation, autocracy, oligarchy, democracy, republic, presidential democracy, parliamentary democracy, head of government, chief of state 1. In this type of citizen participation, one leader holds complete power.

27. Economics, traditional, command, market, mixed, trade, trade barrier, tariff, quota, embargo, specialization, currency, foreign exchange, foreign exchange rate, federal, unitary, confederation, autocracy, oligarchy, democracy, republic, presidential democracy, parliamentary democracy, head of government, chief of state 2. Most, if not all, countries use this type of economic system.

28. Economics, traditional, command, market, mixed, trade, trade barrier, tariff, quota, embargo, specialization, currency, foreign exchange, foreign exchange rate, federal, unitary, confederation, autocracy, oligarchy, democracy, republic, presidential democracy, parliamentary democracy, head of government, chief of state 3. In this government system, all power is given to the central authority.

29. Economics, traditional, command, market, mixed, trade, trade barrier, tariff, quota, embargo, specialization, currency, foreign exchange, foreign exchange rate, federal, unitary, confederation, autocracy, oligarchy, democracy, republic, presidential democracy, parliamentary democracy, head of government, chief of state 4. In this type of citizen participation, the people hold supreme power, usually through the exercise of voting.

30. Economics, traditional, command, market, mixed, trade, trade barrier, tariff, quota, embargo, specialization, currency, foreign exchange, foreign exchange rate, federal, unitary, confederation, autocracy, oligarchy, democracy, republic, presidential democracy, parliamentary democracy, head of government, chief of state 5. The government leader who represents the country at official functions

31. Economics, traditional, command, market, mixed, trade, trade barrier, tariff, quota, embargo, specialization, currency, foreign exchange, foreign exchange rate, federal, unitary, confederation, autocracy, oligarchy, democracy, republic, presidential democracy, parliamentary democracy, head of government, chief of state 6. The study of how people make decisions in a world where wants are unlimited but resources are limited

32. Economics, traditional, command, market, mixed, trade, trade barrier, tariff, quota, embargo, specialization, currency, foreign exchange, foreign exchange rate, federal, unitary, confederation, autocracy, oligarchy, democracy, republic, presidential democracy, parliamentary democracy, head of government, chief of state 7. An economic system where the government controls all industry

33. Economics, traditional, command, market, mixed, trade, trade barrier, tariff, quota, embargo, specialization, currency, foreign exchange, foreign exchange rate, federal, unitary, confederation, autocracy, oligarchy, democracy, republic, presidential democracy, parliamentary democracy, head of government, chief of state 8. In this system, the government divides power between the central government and smaller political authorities.

34. Economics, traditional, command, market, mixed, trade, trade barrier, tariff, quota, embargo, specialization, currency, foreign exchange, foreign exchange rate, federal, unitary, confederation, autocracy, oligarchy, democracy, republic, presidential democracy, parliamentary democracy, head of government, chief of state 9. In this government system, there is a loose alliance of countries or political units that allow the central government to make decisions only on issues that affect the entire alliance.

35. Economics, traditional, command, market, mixed, trade, trade barrier, tariff, quota, embargo, specialization, currency, foreign exchange, foreign exchange rate, federal, unitary, confederation, autocracy, oligarchy, democracy, republic, presidential democracy, parliamentary democracy, head of government, chief of state 10. When countries restrict trade in order to produce/sell their own goods

36. Economics, traditional, command, market, mixed, trade, trade barrier, tariff, quota, embargo, specialization, currency, foreign exchange, foreign exchange rate, federal, unitary, confederation, autocracy, oligarchy, democracy, republic, presidential democracy, parliamentary democracy, head of government, chief of state 11. In this type of citizen participation, control rests with a small group of people with wealth or power.

37. Economics, traditional, command, market, mixed, trade, trade barrier, tariff, quota, embargo, specialization, currency, foreign exchange, foreign exchange rate, federal, unitary, confederation, autocracy, oligarchy, democracy, republic, presidential democracy, parliamentary democracy, head of government, chief of state 12. Limiting the amount of a good that can come into a country

38. Economics, traditional, command, market, mixed, trade, trade barrier, tariff, quota, embargo, specialization, currency, foreign exchange, foreign exchange rate, federal, unitary, confederation, autocracy, oligarchy, democracy, republic, presidential democracy, parliamentary democracy, head of government, chief of state 13. An economic system where the community relies on itself for all needs

39. Economics, traditional, command, market, mixed, trade, trade barrier, tariff, quota, embargo, specialization, currency, foreign exchange, foreign exchange rate, federal, unitary, confederation, autocracy, oligarchy, democracy, republic, presidential democracy, parliamentary democracy, head of government, chief of state 14. A system of government in which the head of government is constitutionally independent of the legislature

40. Economics, traditional, command, market, mixed, trade, trade barrier, tariff, quota, embargo, specialization, currency, foreign exchange, foreign exchange rate, federal, unitary, confederation, autocracy, oligarchy, democracy, republic, presidential democracy, parliamentary democracy, head of government, chief of state 15. A tax on imported goods

41. Economics, traditional, command, market, mixed, trade, trade barrier, tariff, quota, embargo, specialization, currency, foreign exchange, foreign exchange rate, federal, unitary, confederation, autocracy, oligarchy, democracy, republic, presidential democracy, parliamentary democracy, head of government, chief of state 16. Type of money used by a certain country

42. Economics, traditional, command, market, mixed, trade, trade barrier, tariff, quota, embargo, specialization, currency, foreign exchange, foreign exchange rate, federal, unitary, confederation, autocracy, oligarchy, democracy, republic, presidential democracy, parliamentary democracy, head of government, chief of state 17. When one country is particularly good at producing a certain good or service

43. Economics, traditional, command, market, mixed, trade, trade barrier, tariff, quota, embargo, specialization, currency, foreign exchange, foreign exchange rate, federal, unitary, confederation, autocracy, oligarchy, democracy, republic, presidential democracy, parliamentary democracy, head of government, chief of state 18. The act of exchanging one good or service for another good or service

44. Economics, traditional, command, market, mixed, trade, trade barrier, tariff, quota, embargo, specialization, currency, foreign exchange, foreign exchange rate, federal, unitary, confederation, autocracy, oligarchy, democracy, republic, presidential democracy, parliamentary democracy, head of government, chief of state 19. The government leader who is in charge of the day-to-day aspects of the government

45. Economics, traditional, command, market, mixed, trade, trade barrier, tariff, quota, embargo, specialization, currency, foreign exchange, foreign exchange rate, federal, unitary, confederation, autocracy, oligarchy, democracy, republic, presidential democracy, parliamentary democracy, head of government, chief of state 20. A system of government in which the head of government is a part of the legislature

46. Economics, traditional, command, market, mixed, trade, trade barrier, tariff, quota, embargo, specialization, currency, foreign exchange, foreign exchange rate, federal, unitary, confederation, autocracy, oligarchy, democracy, republic, presidential democracy, parliamentary democracy, head of government, chief of state 21. What currency is called when it is transferred into another type of currency

47. Economics, traditional, command, market, mixed, trade, trade barrier, tariff, quota, embargo, specialization, currency, foreign exchange, foreign exchange rate, federal, unitary, confederation, autocracy, oligarchy, democracy, republic, presidential democracy, parliamentary democracy, head of government, chief of state 22. Type of government where the people vote for representatives in their government

48. Economics, traditional, command, market, mixed, trade, trade barrier, tariff, quota, embargo, specialization, currency, foreign exchange, foreign exchange rate, federal, unitary, confederation, autocracy, oligarchy, democracy, republic, presidential democracy, parliamentary democracy, head of government, chief of state 23. An economic system where consumers maintain all control

49. Economics, traditional, command, market, mixed, trade, trade barrier, tariff, quota, embargo, specialization, currency, foreign exchange, foreign exchange rate, federal, unitary, confederation, autocracy, oligarchy, democracy, republic, presidential democracy, parliamentary democracy, head of government, chief of state 24. Forbidding trade with a country

50. Economics, traditional, command, market, mixed, trade, trade barrier, tariff, quota, embargo, specialization, currency, foreign exchange, foreign exchange rate, federal, unitary, confederation, autocracy, oligarchy, democracy, republic, presidential democracy, parliamentary democracy, head of government, chief of state 25. Math equation used when converting currency