Bell Starter  Export  Import  Comparative advantage  Tariff  Quota  Free trade  European Union (EU)  North American Free Trade Agreement  World Trade Organization  Exchange Rate  Export  Import  Comparative advantage  Tariff  Quota  Free trade  European Union (EU)  North American Free Trade Agreement  World Trade Organization  Exchange Rate  Balance of Trade  Trade Deficit  Trade Surplus  Market Economy  Per capita GDP  Command economy  Socialism  Communism  Mixed economy  Developing country  Traditional Economy  Balance of Trade  Trade Deficit  Trade Surplus  Market Economy  Per capita GDP  Command economy  Socialism  Communism  Mixed economy  Developing country  Traditional Economy

United States Economy  The US has a market economy. Most economic decisions are made by individuals looking out for their own self-interests.  The choices you make as a consumer affect the products that businesses make & the prices they receive for their products.  A market economy is based on capitalism, a system in which citizens own most means of production. It is also based on free enterprise, where businesses compete for profit with a minimum of gov’t interference.  The US has a market economy. Most economic decisions are made by individuals looking out for their own self-interests.  The choices you make as a consumer affect the products that businesses make & the prices they receive for their products.  A market economy is based on capitalism, a system in which citizens own most means of production. It is also based on free enterprise, where businesses compete for profit with a minimum of gov’t interference.

ECONOMIC SYSTEMS  MARKET Economy:  FREE ENTERPRISE  CAPITALISM - another name for the market economy  SUPPLY/DEMAND/PRICES  CONSUMERS MOST IMPORTANT  PRIVATE CITIZENS OWN FACTORS OF PRODUCTION  COMPETITION: INVISABLE HAND  EXTERNALITIES  HIGHER PER CAPITA GDP- divides the total GDP by county population  MARKET Economy:  FREE ENTERPRISE  CAPITALISM - another name for the market economy  SUPPLY/DEMAND/PRICES  CONSUMERS MOST IMPORTANT  PRIVATE CITIZENS OWN FACTORS OF PRODUCTION  COMPETITION: INVISABLE HAND  EXTERNALITIES  HIGHER PER CAPITA GDP- divides the total GDP by county population

ECONOMIC SYSTEMS  COMMAND Economy:  GOVERNMENT MOST IMPORTANT B/C IT MAKES ALL DECISIONS  SLOW GROWTH RATE FOR ECONOMY  NO COMPETITION: LOW PRODUCTIVITY & LOW QUALITY OF PRODUCTS  NO INCENTIVE TO CREATE B/C GOVERNMENT OWNS ALL NOT INDIVIDUAL  CONTROLLED BY CENTRAL GOVERNMENT  COMMAND Economy:  GOVERNMENT MOST IMPORTANT B/C IT MAKES ALL DECISIONS  SLOW GROWTH RATE FOR ECONOMY  NO COMPETITION: LOW PRODUCTIVITY & LOW QUALITY OF PRODUCTS  NO INCENTIVE TO CREATE B/C GOVERNMENT OWNS ALL NOT INDIVIDUAL  CONTROLLED BY CENTRAL GOVERNMENT

ECONOMIC SYSTEMS  MIXED Economy: (MOST ECONOMIES TODAY)  INDIVIDUALS ACT FREELY  SUBJECT TO CONTROL OF GOVERNMENT REGULATIONS AND INTERVENTION  USA: GOVERNMENT REGULATES ALL BUSINESSES  USA: CONTROLS COMPETITION BY KEEPING FREE UNDER SHERMAN AND CLAYTON ANTITRUST ACTS  PROTECTS PUBLIC INTEREST  MIXED Economy: (MOST ECONOMIES TODAY)  INDIVIDUALS ACT FREELY  SUBJECT TO CONTROL OF GOVERNMENT REGULATIONS AND INTERVENTION  USA: GOVERNMENT REGULATES ALL BUSINESSES  USA: CONTROLS COMPETITION BY KEEPING FREE UNDER SHERMAN AND CLAYTON ANTITRUST ACTS  PROTECTS PUBLIC INTEREST

TRADITIONAL ECONOMIES  BASED ON:  CUSTOM  TRADITION  WHAT YOUR FATHER DOES SO WILL YOU  SELF SUFFICIENT  SUBSISTANCE FARMING  BASED ON:  CUSTOM  TRADITION  WHAT YOUR FATHER DOES SO WILL YOU  SELF SUFFICIENT  SUBSISTANCE FARMING

United States Economy (continuted)  Incentives are rewards offered to try to persuade people to take certain economic actions. Price, bonuses for salespeople, & low credit rates for consumers are incentives.  Competition forces businesses to use society’s resources efficiently to produce goods & services people prefer & to produce quality products at low costs. Low production costs keep prices low for consumers.  Gov’t can regulate businesses to make sure they are following laws. ( Example: pollution output)  Incentives are rewards offered to try to persuade people to take certain economic actions. Price, bonuses for salespeople, & low credit rates for consumers are incentives.  Competition forces businesses to use society’s resources efficiently to produce goods & services people prefer & to produce quality products at low costs. Low production costs keep prices low for consumers.  Gov’t can regulate businesses to make sure they are following laws. ( Example: pollution output)

SCARCITY  ALL NATIONS NO MATTER WHAT ECONOMIC SYSTEM MUST ANSWER THE THREE BASIC ECONOMIC QUESTIONS BUT THEY DO SO BASED ON THE SCARCITY OF THEIR NATION’S RESOURCES.  SCARCITY: OCCURS WHENEVER WE DO NOT HAVE ENOUGH RESOURCES TO PRODUCE OR BUY ALL THE THINGS WE WOULD LIKE TO HAVE  ALL NATIONS NO MATTER WHAT ECONOMIC SYSTEM MUST ANSWER THE THREE BASIC ECONOMIC QUESTIONS BUT THEY DO SO BASED ON THE SCARCITY OF THEIR NATION’S RESOURCES.  SCARCITY: OCCURS WHENEVER WE DO NOT HAVE ENOUGH RESOURCES TO PRODUCE OR BUY ALL THE THINGS WE WOULD LIKE TO HAVE

Making Wise Choices  You make a rational choice when you buy goods & services that you believe will best satisfy your wants for the lowest possible cost.  Wise decision making by individuals also benefits society by making the best use of scarce resources.  Being fully informed is the best way to make the best economic decision.  You make a rational choice when you buy goods & services that you believe will best satisfy your wants for the lowest possible cost.  Wise decision making by individuals also benefits society by making the best use of scarce resources.  Being fully informed is the best way to make the best economic decision.

RESOURCES  CAPITAL: MONEY  NATURAL: LAND WATER OIL  HUMAN: PEOPLE  CAPITAL: MONEY  NATURAL: LAND WATER OIL  HUMAN: PEOPLE