IV. Development, Trade, and Money Management

A. Economic Development Economists use the concept of development to talk about a country’s economic well being Development – economic growth or an increase in living standards When studying development, we look at factors like people’s education, literacy, and life expectancy

Developed country – a country with a strong economy and a high standard of living, such as the United States. only about 20 percent of the world countries are developed developing country – a country with a less-productive economy and lower standard of living, such as Haiti

Economists use gross domestic product to measure a country’s economy Gross Domestic Product (GDP) – total value of all goods and services produced in a country in a year. Countries are always seeking to increase economic development

One way that a country can increase development is through productivity. Productivity – the amount of goods and services produced compared to resources used Another way to increase growth is by using technology Technology – is the practical application of knowledge to accomplish a task Unfortunately this is very expensive

B. Trade To get the products we need and want, we engage in trade. Trade – is the exchange of goods and services in a market. Trade benefits both the buyer and the seller.

All buying and selling that takes place within a country is known as domestic trade trade with foreign nations is known as international trade. international trade involves imports and exports

Import – Goods and services sold in a country that are produced in other countries Export – good and services produced within a country and sold outside the country’s borders

Tariff – a tax on imports or exports trade barrier – is a governmental policy or restriction that limits international trade free trade – the removal of trade barriers

C. Money Management Money is anything that is generally accepted as payment for goods and services. Money is a scarce resource that people must manage to have enough for their needs and wants People’s needs, wants, and incomes can change so it is important to plan ahead.

Budget – is a plan that shows income and expenses over a period of time. a budget’s income should be equal or greater than its expenses Saving – is that act of setting aside money for future use.

Many people save their money in banks However, sometimes it may be necessary to borrow money from a bank through a loan Interest – the price paid for borrowing money

Investing – is the act of using money in the hope of making a future profit Stock – a share of ownership in a company bond – a certificate issued by a company or government promising to pay back money with interest.