Economics
Why is competition a good thing?
What is in the global economy, competition is also good because it leads to many benefits, including lower prices, better quality, and the innovation of new products.
Countries, individuals, and even summit teams must make certain economic choices including how to make the best use of scarce resources such as natural, human, and capital resources, but countries can never satisfy all of the wants and needs of all people.
What is why everyone makes choices about resources?
Who ultimately pays the price of tariffs?
Governments usually charge tariffs on imports in an attempt to protect their local industry from foreign competition. This causes prices of these goods to be more expensive for their consumers who buy them. Tariffs may benefit some groups such as local industries and workers but at the expense of other groups like consumers.
Free market economies rely on competition to reach a price of goods and services that will cause importers to purchase and exporters to sell these goods and services.
What is how are prices set in a free market?
In a free trade global market economy, when the United states trades wheat to Saudi Arabia for oil, both countries gain. Resources are not equally distributed among all trading countries. A policy of free trade between countries tends to benefit consumers most of all because of lower prices.
What is who benefits from trade?
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Why do countries trade?
What is if a group of students did not enjoy spending time together, the individuals would probably seek out other friends. Likewise, people and countries engage in trade and cultural connections when they both expect to gain something of value.
In this economy the government owns all industries. Production goals and wages are set by the government. The government also provided education, child care, and medical care for its citizens.
What is a command economy?
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The market value of a nation’s goods and services is called its gross domestic product (GDP). When you divide a nation’s GDP by its population, it is called the GDP per capita. The Real GDP per capita (PPP) is often used to compare the standard of living between countries. This refers to the gross domestic product converted to international dollars using Purchasing Product Parity rates, and then divided by the country’s population.
What is GDP per capita?
When we say the world is getting smaller and more connected, we are describing a process called globalization. ___________ means in part that conditions in one country are having an increasingly greater impact on other countries. This increases both risk and opportunities.
What is globalization?
When a country’s resources such as labor, materials, or natural resources are fully employed, it could only produce more of a particular product if it decided to produce less of other products.
What is what happens when resources are fully employed?
One action that governments might take to stimulate the economy and increase consumer spending is to reduce taxes and tariffs because when these are reduced, consumers have more income left over to spend and therefore the economy grows.
What is why a government would reduce taxes?
When a country or individual chooses to spend resources on one project or product, it gives up the opportunity to spend those resources on other goods, services, or projects. This is called the opportunity cost of that country’s decision.
What is opportunity cost?
A ___________ occurs when a country imports more goods than it exports. If exports exceed imports, the county has a favorable balance of trade.
What is a trade deficit?
What are some characteristics of less developed countries?
What is Less developed countries tend to have agriculturally dominated economics and large holdings of natural resources.
Why should countries specialize?
What is when countries specialize in the production of certain goods and services, one of the advantages is that the country can produce more of some goods at a lower cost. This is usually followed by increased trade between countries, which usually leads to an increase in world productivity and an overall increase in the standard of living long term.
A country’s productive resources refers to its natural resources, human resources, and capital goods.
What is a country’s productive resources?
When a country experiences a decline in its unemployment rate, it means that more people are employed. When more people are employed, this leads to an increase in economic growth.
What is what does decline in unemployment mean?
A flexible exchange rate means the value of a currency can change as supply and demand changes.
What are the advantages of a flexible exchange rate?
What is flexible rates can solve currency shortages more easily.
An ____________ is the price of one country’s currency in terms of another country’s currency. Currency exchange rates between countries fluctuate. If a tourist from the United States traveled to China last year and $1=7 RMB, and then goes to China again this year when $1= 6RMB, this means that this year a 70 RMB lunch in China will be more expensive for the American tourist than last year.
70 RBM/ 7 = $10
70 RBM/ 6= $11.67
When the ____________ changes, the relative price of goods and services also changes.
What is an Exchange Rate?
Total spending within a country’s economy declines when consumer spending is reduced. Consumers usually reduce their spending when they experience a decline in consumer incomes.
What is what happens when consumer incomes go down?
A country’s potential output of goods and services, its GDP, is limited by the quantity and quality of its resources, including its labor, capital, and natural resources.
What is what limits a country’s GDP?
If China has a _________________ over the United States in producing consumer goods, this means that the opportunity cost of producing consumer goods in China is LOWER than in the United States. This usually means that China should specialize in consumer goods and the United States should specialize in something else.
What is comparative advantage?
All countries and individuals seek to improve their standard of living and to make their economies grow. In the short term, they might accomplish this temporarily by borrowing money and spending more, but to make this more permanent, they should invest in long term improvements like education, technology, and infrastructure.
What is how can countries improve their standard of living?