Economy

Economic Unit Vocabulary

Types of Economic Systems:

  • Traditional Economies: economic decisions are based on customs and traditions.

  • Command Economies: the government usually owns most of the property/ makes decisions

  • Market Economies: private citizens own businesses/ keep the profits earned

  • Mixed Economies: no country has a pure economic system. Most are placed on a continuum between a market and command. Some government controls are always present.

 

Trade Barriers:

  • Trade barriers – anything that restricts free trade

  • Tariffs- taxes on goods that come into a country. (Imported goods). Increases price of the imported. When the price goes up on goods from foreign countries, demand for the lower-priced item produced at home (domestic good) goes up.

  • Quotas- Restriction on the amount of goods that can be imported into a country. Quotas can create shortages which can cause prices to rise.

  • Embargo- when a country prohibits the sale of certain products to another country- usually when two countries are having political disputes.

 

Resources & Capital:

  • Natural resources – Raw materials that come from nature and are used for production of goods. Can be renewable or non-renewable.

  • Capital resources - goods people produce and use to make other goods and services- machines, tools

  • Human capital- The education, skills, and experience of workers.

  • Trade deficit – when a country imports more than they export

  • Trade surplus- when a country exports more than it imports

  • Trade balance-when the value of imports is balanced (equal) to the exports

 

Currency & Earnings

  • Consumer -someone who buys goods or services.

  • Profit -amount of money made by a business that is more than the amount put in at the start or paid out as expenses. Income minus expenses = profit

  • Currency- a type of money that a country uses

  • Entrepreneur -someone willing to take a risk to start a new business

  • Barter - the trading of goods and services without using currency (money)

 

International Trade

  • GDP- Gross Domestic Product- the total value of goods and services produced within a country in a year.

  • Interdependence- reliance on trade with other countries to fulfill a country's needs

  • Globalization – cooperation among nations in production and exchange of goods and services

  • Specialization – concentration on a narrow range of goods and services

  • Literacy Rate- percentage of the population able to read and write


Types of Economic Systems:

  • Traditional Economies: Economic decisions are based on customs and traditions.

  • Command Economies: The government usually owns most of the property and makes major decisions.

  • Market Economies: Private citizens own businesses and keep the profits earned.

  • Mixed Economies: No country has a pure economic system; most are on a continuum between market and command with some government controls present.