ECONOMIC SYSTEMS
What is the difference between a Market Economy and a Command Economy?
Market Economy- economic decisions are made by individuals (businesses/ buyers and sellers) who decide what to produce and what to buy
Command Economy- the government makes most of the basic economic decisions for the workers
What is Specialization?
Specialization- those products a country makes best and that are in demand on the world market
What is a Trade Barrier?
A Trade Barrier refers to any regulation or policy that restricts international trade.
What is GDP?
GDP- the value of all goods and services produced within a nation in a given year or gross domestic product
What are Natural Resources?
Natural Resources- something that is in or supplied by our natural environment and can be consumed or used by people; “Gifts of Nature”
What are the three Questions of economics?
What to produce?
How to produce?
For whom to produce?
What is Voluntary Trade
a free and unregulated exchange of goods and services.
What is a Tariff and how does it protect business within a country?
Tariff- a tax placed on goods when they are brought into one country from another country (raises the price of imported goods, protecting domestic businesses)
What is Literacy Rate?
Literacy Rate- the percentage of person over the age of 15 that can read and write
What are Capital Goods?
Capital Goods- the factories, machines, and technology that people need to make products (tools)
What does the government control most of in Saudi Arabia?
The OIL industry
How does Specialization encourage trade?
Specialization encourages trade between countries because a country can get what it needs at the lowest cost when it is produced by another country that specializes in that item.
What is a Quota and how does it protect business within a country?
Quota- a limit on the amount of foreign goods that can come into a country (raises the price of imported goods, protecting domestic businesses)
What is GDP per capita? How is it used?
GDP per capita- the GDP of a nation divided by the population; per person
What is Human Capital?
Human Capital- the knowledge, skills, and training that workers need to produce goods or services (education)
Where do Israel, Turkey, and Saudi Arabia fall on the economic continuum? (% freedom)
Israel- 68% Market
Turkey- 57% Market
Saudi Arabia- 56% Market
What do Israel, Turkey, and Saudi Arabia specialize in?
Israel- technology, medicines, aircraft parts, diamonds
Turkey- gold, coal, textiles (cloth for clothing), automobiles (“diversified”- a variety of specialties)
Saudi Arabia- OIL
What is an Embargo and why would a country use it?
Embargo- a trade barrier in which one country announces that it will no longer trade with another country in order to isolate and cause problems with that country's economy (“bans” trade)
What is Standard of Living?
Standard of Living- a level of material comfort as measured by the goods, services, and luxuries available to an individual, group, or nation (quality of life)
What is Entrepreneurship?
Entrepreneurship- when people are willing to take risks to create new businesses and products in order to make a profit
What type of economic system does each country have?
Market-Leaning Mixed or Command-Leaning Mixed
Israel- Parliamentary Democracy
Turkey- Presidential Democracy
Saudi Arabia- Absolute Monarchy
What is OPEC and what is OPEC's main goal?
OPEC (Organization of Petroleum Exporting Countries)- a group of countries that export oil to other countries; They agree to limit the amount of oil produced to increase demand and raise oil prices so they can make more money
_____ is an amount of money paid directly to domestic producers to make them more competitive with foreign imports.
Tarrif
Describe the relationship between GDP (per capita), literacy rate, and standard of living.
GDP per capita measures the strength of a country’s economy- the higher the GDP per capita, the more valuable the economy.
Literacy Rate measures the most basic skills workers need to be productive- the higher the literacy rate, the more productive the workers.
Standard of Living measures the quality of life that citizens enjoy- the stronger the economy, the higher the quality of life for citizens.
What are the four Factors of Production?
Land
Labor
Capital
Entrepreneurship