Economies of the World

What is economics The production, distribution, and consumption of goods and services Deals with how people make and spend money How we use our resources (Land, Labor, and Capital) to meet our needs and wants. All resources are scarce (limited)

Types of Resources Land – natural resources used to produce goods and services Labor – people who work for a wage ($) Capital – anything else that is used to produce goods and services (machines, buildings, vehicles, etc…) **All resources are scarce (limited) **People must, therefore, make informed choices about how they will use their resources to meet their needs and wants

Productivity (efficient use of resources) The amount of goods or services produced in a given amount of time using a given amount of resources Goal: to produce as much as possible in the shortest amount of time possible using the least amount of resources possible (while still producing quality) Reason: time and resources (land, labor, and capital = $$$

Moving Assembly Line Interchangeable Parts: parts that are exactly the same size and shape; designed so that all parts will fit together Division of Labor: dividing the production process into a series of steps so that workers only have to do one (or a few) jobs; no longer a need for skilled workers **Result: INCREASED PRODUCTIVITY **Benefit for consumers: goods are cheaper to buy and fix

Production To make or provide a good or service

Distribution To make the good or service available to consumers

Consumption Consumers buy and use products and services

Traditional Economy (Do It Yourself) Traditional Economy: people rely on themselves for most of their food and goods Trade usually involves goods for other goods; little money is used Rural or remote communities Developing Countries

Market Economy (Power to the People) Private Ownership (land and businesses are owned by private citizens) Free Trade (government does not control production) Competition (businesses offering the same good or service compete for consumers) Cons: Greed, Rich vs. Poor

Command Economy (It’s our way, or the highway) Government controls all aspects of the economy Government owns all land and business No competition Cons: little to no incentive to achieve

Mixed Economy Combination of Market and Command ideas Both the people and the government can own land and business Government usually controls most major industries (i.e. energy, health care, etc…) Results in higher taxes and elimination of extreme wealth Socialism Cons: reduced incentive to achieve

Government and Economy Rule by few = Command Economy Rule by Many = Market Economy Democracy + Market Economy = Developed Nation Communism, Dictatorship + Command Economy = Developing Nation

Developed and Developing

Developed and Developing Cont. Developed: wealthy, lots of industry, access to health care, educational opportunities, higher quality of life in general Developing: poor, little to no industry, inadequate health and education systems, inadequate public services, unstable governments, lower quality of life, I could go on, but you get the idea

Economic Indicators: The Human Development Index (HDI) Gross Domestic Product (GDP): the value of all the goods and services produced by a country (WEALTH) Life Expectancy: the average # of years a person is expected to live (HEALTH) Literacy Rate: the % of people who can read and write in their own language (EDUCATION/SKILLS)

HDI Comparison Bhutan GDP: $751 Life Expectancy: 63.4 Literacy Rate: 34%, 60% HDI Rank: 135 (out of 177) Iceland GDP: $23, 324 Life Expectancy: 81 Literacy Rate: 99% HDI Rank: 2 (out of 177)

Globalization and Interdependence Globalization: the process in which countries are increasingly linked to each other through culture and trade Popular Culture: culture traits that are common around the world; widely accepted Interdependence: the reliance of one country on the resources, goods, or services of another country Countries need each other World Community or Global Village

How does popular culture affect people around the world? World Community/Global Village (because our advancements in communication and transportation the world has become small) We have access to or are exposed to cultures around the world. We then filter out what we don’t like, and keep what we do.

Growth in Global Trade? Improvements in Communication (phones, internet, , texting, etc…) Improvements in Transportation (trains, planes, and automobiles)

Interdependence? A country becomes interdependent with each other when their need for a particular resource or good surpasses their ability to supply it for their people. Example: the USA and oil

Interdependence Positives 1.Increased Cooperation 2.Increased Prosperity 3.Access to more resources 4.Humanitarian Aid Negatives 1.Increased Conflict (countries may fight over resources) 2.Greed 3.A country may become unable to provide the resource to other countries