What will be produced? How will it be produced? Who will benefit? Economic Systems What will be produced? How will it be produced? Who will benefit?

Infrastructure All things an economy needs to function. Railroads, highways, fiber optic lines, harbors, airports, telephone poles/lines,etc.

Levels of economic Development Usually measured by economic indicators such as: Gross Domestic Product- Total value of goods and services produced within a country. Gross National Income- Total value of goods and services produced by a country. What is the difference?

Other indicators Per capita– refers to per person…..GDP per capita means the average GDP per person. Life expectancy– average number of years a person will live. (helps indicate development)

Levels of development Less Developed countries (LDC)-relying on a few products for export. Majority of the country earns a living through subsistence agriculture. Birthrates are high, development low. Democratic Rep. of Congo, Mali, Niger, Chad Newly Industrialized countries(NIC)-countries that are transitioning from primary to secondary activities. Birthrates are dropping development increasing. China, India, Indonesia, Vietnam, Thailand, Mexico Developed countries-economies are dominated by tertiary and quaternary activities. Birthrate is low, development high. US, Canada, France, Sweden, Germany, Japan

North/South split This refers to the more developed countries in the North and the less developed countries in the south.

Traditional Economies Three questions are answered on the basis of customs, social patterns, religion, or other ideas handed down through time.

Terms associated with traditional economies: Subsistence economy Non-industrialized Agricultural (rural) Barter system Dual economy Examples: Chad, Haiti, Rwanda

Command Economies The state makes all economic decisions. The government owns and operates means of production.

Terms associated with command economies: Planned economy Communism Examples: Cuba, North Korea, Laos

Market Economies Economic decisions are made by individuals in the marketplace.

Terms associated with market economies: Free market Free enterprise Capitalism Demand economy Examples: United States, Japan

Mixed Economies Mixed economies have features of both command and market economies. There are no pure economies—they exist along a continuum from pure capitalism to command. UK, US, Singapore

What is important to understand about this? The way that countries answer the three basic economic questions can have a great effect on their economies.