Economics SS6E5 The student will analyze different economic systems.

Trade Barriers A trade barrier is a general term that describes any government policy or regulation that restricts international trade. The barriers can take many forms, including the following terms that include many restrictions in international trade within multiple countries that import and export any items of trade.

Tariff A tariff is a tax imposed on goods when they are moved across a political boundary. tariffs are usually imposed on imported goods, although they may also be imposed on exported goods.

Embargo An embargo is the stoppage of commerce and trade with a certain country In order to isolate it and to put its government into a difficult situation Given that the effects of the embargo are often able to make its economy suffer from the initiative.

Quota A quota is a goal for the production of a good. It is typically set by a government or an organization Quotas can be set high to encourage production or can be used to limit production to control the supply of goods.

Explain why international trade requires a system for exchanging currencies between nations. This is important when trading with other countries around the world. Money value is different from country to country.

Currency Converter http://finance.yahoo.com/currency-converter#from=USD;to=EUR;amt=50

Write this Essential Question down and answer it….. Why does international trade require a system for exchanging currencies between nations?

Three basic economic questions 1. What will be produced? 2. By whom will it be produced? 3. For whom will it be produced? Production, Distribution & Consumption

Israel (1) What to produce? A large portion of Israel’s GDP comes from high tech manufacturing, financial services, and agriculture. (2) How to produce? Israel has substantial government ownership of business, but is gradually privatizing companies. (3) For whom to produce? The private sector produces goods and services for domestic and international markets based on the market price system. Place on the continuum: Israel would fall slightly to the market side of center on the continuum.

Saudi Arabia (1) What to produce? Saudi Arabia is the world’s leading producer of oil. (2) How to produce? Over 95% of the oil industry in the country is operated by the government. the Saudi government has been trying to increase private ownership of business and encourage more joint ventures with private foreign companies. (3) For whom to produce? One third of Saudi Arabia’s GDP is based on exports to other countries. (This is due to the economy’s reliance on the oil sector.) Place on the continuum: Saudi Arabia would fall to the command side of center on the continuum.

Turkey (1) What to produce? Turkey has a diversified economy with large service, manufacturing, and agricultural sectors. (2) How to produce? Since the late 1980s, Turkey has gradually moved from a government directed economy to more private enterprise. (3) For whom to produce? One fifth of Turkey’s production is exported. The remainder is consumed by domestic consumers and the government. Place on the continuum: Turkey would fall between Saudi Arabia and Israel on the market side of the continuum.

How many basic types of economic systems are there? 4 Name the economic systems. Traditional, Command, Market, Mixed Which economic system do most textbooks say is the most common throughout the world? Mixed is not an economic system but rather a blending of two different types of systems. 13

Four Types of Economies Market Economy Command Economy Mixed Economy Traditional Economy

Market Economy In a market economy, national and state governments play a minor role. Consumers and their buying decisions drive the economy. This would be opposite of a command economy

Command Economy The most important aspect of this type of economy is that all major decisions related to the production, distribution, commodity and service prices, are all made by the government.

Countries with Command Economy Command economies exist in some countries such as Cuba Libya Saudi Arabia Iran North Korea

Traditional Economy The economic system in which resources are allocated by inheritance, and is based on primitive methods and tools. It is strongly connected to subsistence farming. This systems can be found to be widely used in Islamic countries Mostly in underdeveloped countries

Mixed Economy A mixed economy blends components of two or more of the following economic systems to varying degrees: traditional, market, and command Most countries are a mixed economy

Economic Systems Pure Command Pure Market Mixed Economy

100 Economic Systems Israel 68% Saudi Arabia 64% Iran 45% Pure Command 7th Grade- This information is meant to be used in conjunction with the 6th and 7th grade Teacher Notes. For additional resources, go to GeorgiaStandards.org. (Note: This is not an expectation for students to memorize numbers, but to understand that factors that influence specific countries to move more towards a command or market economy). The numbering system is based on The Heritage Foundation’s Economic Freedom Index 2009 The Heritage Foundation is a conservative organization that has partnered with the Wall Street Journal for over a decade to evaluate each country based on a set of 10 criteria to determine economic freedom. Update information using resources listed in the Teacher Notes. 100 Pure Command Pure Market Mixed Economy 21

100 Economic Systems South Africa 64% Nigeria 55% Pure Command 7th Grade- This information is meant to be used in conjunction with the 6th and 7th grade Teacher Notes. For additional resources, go to GeorgiaStandards.org. (Note: This is not an expectation for students to memorize numbers, but to understand that factors that influence specific countries to move more towards a command or market economy). The numbering system is based on The Heritage Foundation’s Economic Freedom Index 2009 The Heritage Foundation is a conservative organization that has partnered with the Wall Street Journal for over a decade to evaluate each country based on a set of 10 criteria to determine economic freedom. Update information using resources listed in the Teacher Notes. 100 Pure Command Pure Market Mixed Economy 22

100 Economic Systems Japan 73% India 54% China 53% North Korea 2% Pure 7th Grade- This information is meant to be used in conjunction with the 6th and 7th grade Teacher Notes. For additional resources, go to GeorgiaStandards.org. (Note: This is not an expectation for students to memorize numbers, but to understand that factors that influence specific countries to move more towards a command or market economy). The numbering system is based on The Heritage Foundation’s Economic Freedom Index 2009 The Heritage Foundation is a conservative organization that has partnered with the Wall Street Journal for over a decade to evaluate each country based on a set of 10 criteria to determine economic freedom. Update information using resources listed in the Teacher Notes. 100 Pure Command Pure Market Mixed Economy 23