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What is Economics? Part 2

1) Economic System An economic system organizes a country’s resources. It helps decide 1) what, 2) how, and 3) for whom to make things. EX: command, market, traditional, mixed

2) Specialization How a country chooses to answer the 3 basic economic questions usually leads to specialization. Countries choose to make some goods & services instead of others, depending on what resources they have.

3) Voluntary & International Trade Due to specialization, countries need to trade. Countries trade to get the goods & services they DON’T make from countries that DO make them.

4) Import & Export When countries trade, they import the resources they DON’T have and export the resources they DO have.

5) Currency & Exchange Rate To make trade easier, countries use currency. If countries don’t use the same kind of currency, they must use an exchange rate.

6) Trade Barriers Due to specialization & exchange rates, goods and services from other countries are sometimes cheaper. Countries may use trade barriers to protect their businesses from foreign competition (ex. cheaper products) EX: embargo, quota, tariff

1) Economic System 2) Specialization 5) Currency & exchange rate Economic systems organizes a country’s resources. It helps decide 1) what, 2) how, and 3) for whom to make things. EX: command, market, traditional, mixed 2) Specialization How a country chooses to answer the 3 basic economic questions usually leads to specialization. Countries choose to make some goods & services instead of others, depending on what resources they have. 3) Voluntary & International Trade Due to specialization, countries need to trade. Countries trade to get the goods & services they DON’T make from countries that DO make them. 5) Import & Export When countries trade, they 1) import the resources they DON’T have and 2) export the resources they DO have. 5) Currency & exchange rate To make trade easier, countries use currency. If countries don’t use the same kind of currency, they must use an exchange rate. 6) Trade Barriers Due to specialization & exchange rates, goods and services from other countries are sometimes cheaper. Countries may use trade barriers to protect their businesses from foreign competition (ex. cheaper goods & services) EX: embargo, quota, tariff

5) Currency & Exchange Rate 6) Trade Barriers 1) Economic System An economic system organizes a country’s resources. It helps decide 1) what, 2) how, and 3) for whom to make things. EX: command, market, traditional, mixed 2) Specialization How a country chooses to answer the 3 basic economic questions usually leads to specialization. Countries choose to make some goods & services instead of others, depending on what resources they have. 3) Voluntary & International Trade Due to specialization, countries need to trade. Countries trade to get the goods & services they DON’T make from countries that DO make them. 4) Import & Export When countries trade, they import the resources they DON’T have and export the resources they DO have. 5) Currency & Exchange Rate To make trade easier, countries use currency. If countries don’t use the same kind of currency, they must use an exchange rate. 6) Trade Barriers Due to specialization & exchange rates, goods and services from other countries are sometimes cheaper. Countries may use trade barriers to protect their businesses from foreign competition (ex. cheaper products) EX: embargo, quota, tariff