Gross Domestic Product (GDP)
Measure of an economy’s ______and ______(monetary measure - $13.78 trillion in 2007)
Total value of all the ______goods and services produced in a country during a single year. (used cares are not counted in GDP because second hand sales are not counted)
Used to measure ______of ______(quality of life based on the possession of ______and ______that make life easier) in a country.
Measures ______not quality.
Per Capita GDP – total GDP divided by the country’s population – U.S. was $45,800 in 2007
Compared yearly to check growth of the country.
______GDP from previous year = ______economy.
______GDP from previous year = ______economy.
Economic Systems
Three major types
1.
2.
3.
What are 2 distinguishing factors of economic systems?
Traditional Economy
Economic decisions are made by ______handed down through generations.
Hunting, farming, and gathering No Technology
Activities center around the ______
Men and women have ______social roles
Found in rural, non-industrialized areas. (Africa, S. America, Asia)
Command Economy
______makes all economic decisions. (China, N.Korea, Vietnam, Cuba, and the former Soviet Union).
No individual freedoms!
What are 2 advantages of a command economy?
What are 2 disadvantages of a command economy?
Market Economy
Decisions are made by the principles of ______and ______.
______- People buy, sell, and produce whatever they want. People can work where they want.
Capitalism - ______own most means of production.
What is Free Enterprise?
7 characteristics of a market economy
1. ______- exchanges here determine prices of goods and services. It’s the ______and ______exchange of goods and services between buyers and sellers.
2. Consumer Sovereignty – The consumer is ‘_____’ of the market.
- Why are the consumers ‘king’ of the market?
- It exists only in ______based economies.
3. Economic Freedom – freedom of choice with ______.
- Example – an entrepreneur starts a business and it fails. The gov’t usually will not help out.
4. ______- the freedom to own, use, or dispose of our property as long as it doesn’t interfere with the rights of others.
5. Competition – struggle between buyers and sellers to get the best products at the lowest prices.
- ______thrives on competition
- Rewards the most ______producers.
6. Profit motive - the driving force that encourages individuals and organizations to improve their material well-being.
- What is the purpose of a profit motive?
- It is the reason for growth in a market system
7. Voluntary Exchange – the act of buyers and sellers ______and ______engaging in market transactions.
- Both buyers and sellers must feel a benefit.
Mixed Economy
Any combination of Economic systems
The United States is a mixed economy because ______and ______exist with government regulations.
What are some services the U.S. govt. provides?
Has some gov’t regulation
At certain times gov’t can take control of the means of production.
Capitalism & Free Enterprise
The U.S economy is built on a ______economy, but government still plays a role.
Free Enterprise - ______gov’t interference
Capitalism - ______citizens own and use factors of production (______, ______, capital, & entrepreneurship) to make a profit.
The Rise of Capitalism
2 concepts developed
1.
2.
1200s trade routes opened between Europe and the East.
Silk roads, Marco Polo
Throughout hundreds of years trade increased
Developed ideas of wealth
______
Scottish Economist
Wrote Wealth of Nations
Basic Principles of Economics
Individuals who seek profit benefit all of society
______-______- to leave alone
What are the 2 main concepts of Laissez-Faire economics?
1.
2.
Socialism
What is the main belief of socialism?
______Wrote “The Communist Manifesto”
Socialist – believed industrialized nations divided into bourgeoisie (______) & proletariat (______)
Predicted revolution of the proletariat
Believed socialism would develop into ______.
Communism
Communism – one class would evolve where property would be ______held & there would be no need for ______.
Built on the idea of ______.
Transitioning Economies
Former Soviet Union & the Soviet Bloc
Inefficiency of ______economies led to no or very small growth
Transition of this type of economy let to the transition from ______to ______.
Why do you think a transition from one economy to another would be difficult?
NAFTA
North American Free Trade Agreement (NAFTA) – agreement between, ______, ______, and the ______where ______were almost completely eliminated (“Free trade”)
Began on Jan. 1 1994
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