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Economic Overview. Economic Systems. Economics The study of how people manage their resources Produce and exchange goods and services. Key Terms. Producers Owners & workers Consumers People who buy and use the goods and services Goods Products being made or grown
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Economic Systems • Economics • The study of how people manage their resources • Produce and exchange goods and services.
Key Terms • Producers • Owners & workers • Consumers • People who buy and use the goods and services • Goods • Products being made or grown • Pencils, paper, books, clothes, houses, bikes, iPods, gas • Services • Jobs people do to help other people • Doctor, teacher, mechanic, waitress
Summarizing Activity • Goods vs. Services • Copy the chart below • Mark if the worker provides a good or service
Types of Resources • Human Resources • Skills people have to produce goods or services • The people that do the work. • Capital Resources • Things people make (machines or equipment) to produce goods and services • Natural Resources • Nature = forests, water, fertile soil • People can’t make these resources • Renewable Resources – able to replenish – trees • Non-renewable Resources – not able to be replenished - oil
Summarizing Activity • Write each resource on your paper. • Label which type of resource it is. • N = natural resource. • H = human resource. • C = capital resource. • Ocean • Hardware store • Dentist • Coal • Steel mill • River • Bus • Bus driver Turn this in to me
3 Basic Economic Questions • What will be produced? • How will it be produced? • For whom will it be produced? • Based on how a country answers these questions will determine what type of economy they will have.
Key Terms • Currency • Money that is accepted as a medium of exchange • USA = dollar, England = pound, Russia = ruble, Greece = euro • Exchange Rate • Amount of one currency that can be purchased for another currency • Supply and Demand • Price of a good rises or falls depending on how many people want it or amount available • Scarcity • Not enough goods or services are available • Conflict of what people want and what is available to them • Entrepreneur • Person who owns a company and assumes the risk for its success
International Trade • Many things we want or need come from other parts of the world. • International trade is the movement of goods and services between countries.
Export vs. Import Countries must have a “Balance of Trade” between Imports and Exports. Imports Goods or services that are produced in another country. Shipped into this country to be sold to consumers. • Exports • Goods or services that are produced in one country. • Shipped to consumers in other countries to be used.
Trade Barriers • Some countries limit the amount of imports into a country by using trade barriers. • Tariffs • A fee or tax charged for goods brought into a country from another country • Used to protect products made within a country. • Embargo • Government placed restrictions on the import and export of certain goods. • Usually a political action backed by the military.
Summarizing Activity – Think, Pair, Share • What do you think? • Pretend the USA could not import good from other countries. • How would your daily life be different? • Share with your partner how your life would be different.
Types of Economic Systems • Market Economy • Businesses are privately owned (Capitalism) • Workers produce goods and services • Workers paid from profits as determined by owners • No government control of business • Examples: No “true” market economy
Command Economy • Government owns ALL industry (Communism, Socialism) • Government provides all goods and services the people need • Government determines what is produced, price and wages • Example: Cuba, China, North Korea
Summarizing Activity – Think, Pair, Share • What is the difference between a Market Economy and a Command Economy?
Traditional Economy • Based on customs and traditions (Agrarian societies) • Usually based on agriculture and hunting • Typically, non-industrialized countries • Example: Aborigines in Australia
Mixed Economy • Features of both Market and Command Economies • Businesses are owned by both individuals and the government • Government controls select businesses • Ie. Post office, healthcare, banks • Example: USA, Great Britain
Personal Money Management • Savings • Money that has been set aside for future use • Budget • Financial plans that allow a person to manage money • Helps prevent debt • Loan/Credit • A way to borrow money to buy something now and pay for it later. • Interest • A fee that is added to the amount of money borrowed.
