Economics The social science that deals with the production, distribution, and consumption of goods and services

Economies  Market Economy: A system in which the production is owned and operated for profit.  Example – The people are running the businesses.  Mixed Economy: A system in which the production is a combination of both private and state run businesses. Most economies in the world are mixed economies.  Example – The United States is considered to have a mixed economy

Different Forms of Economies Command Economy  A command economy is an economic system in which the production is controlled by the state.  Examples – Cuba, North Korea, China, and Iran Traditional Economy  A traditional economy is a system in which the production is the result of ritual, habit, and custom. (It is generational and occurs generation and generation.)  Examples – Parts of Africa, South America, Asia, and tribal areas tend to have traditional economies.

Developed vs. Developing Countries Gross Domestic Product (GDP)  The amount of goods and services produced by a state in one year.  A key indicator of the level of development of a state. Per Capita GDP  Total GDP number divided by the population to deliver a per person share of GDP. Social, demographic, and economic indicators distinguish less developed countries from developed countries.

Characteristics of Developed Countries  Good natural resources  Energy  High literacy rates  High GDP  Strong economy  Good medical care  Long life expectancy  Stable government Examples – United States, United Kingdom, Germany, Japan

Characteristics of Developing Countries  Low GDP  High poverty rate  Low literacy rate  Low life expectancy  Unstable economy  Unstable government  Weak industrial base Examples – Haiti, Kenya, Rwanda, Vietnam

Vocabulary  Embargo: Suspension of trade with another country.  Gross Domestic Product: GDP is the total economic production of a State in a given year. GDP is also an indicator of the level of economic development of a State.  Per Capita GDP: The amount of production in a state in a given year divided by its population  Boom/Bust Cycle: Up and down cycle of a market economy characterized by alternating periods of economic growth and contraction.  Recession: Short term negative GDP growth in a State’s economy  A decrease in GDP over 6 months  Depression: Long term, persistent negative GDP in a State’s economy  An economic depression is a really long and persistent recession

More Information…  Africa’s economy depends on its abundant mineral resources.  The Middle East’s economy depends on oil/petroleum.  Many countries economies depend on world demand for their goods to succeed.  Latin American countries have a hard time attracting investments from world groups due to political instability.  Literacy Rate is most often based on the percent of the population over the age of 15 that can read and write.