1. Economics How countries decide to use their natural resources

2. Because no country has an abundance of everything people want or need, it has to make a plan on how to use the resources is has. The way a country organizes and distributes resources is called an Economic System. Scarcity = short supply Abundance = a very large supply

3. Every society must decide how to make the best use of its limited resources by answering… 3 Basic Economic questions: What goods & services will be produced? How will the goods & services be produced? Who will consume the goods & services?

4. These 3 questions are answered by the type of economic system a country has. The 3 basic economic systems are: TRADITIONAL ECONOMY COMMAND ECONOMY MARKET ECONOMY A mixture of any of the above are called a MIXED ECONOMY.

5. Traditional Economy Customs, traditions and beliefs answer the 3 basic economic questions. People do what has always been done to survive. They do what their ancestors have done. Bartering is widely used in traditional economies. Think, subsistence farming and herding.

6. Bartering is trading for goods and services without the use of money. Subsistence farming-farming that generates only enough produce to feed the farmer's family, with little or nothing left over to sell

7. Traditional Economy What goods/services will be produced? People follow tradition and make what their ancestors made. How will goods/services be produced? People produce goods/services the same way their ancestors did. Who will consume the goods/services? The people in the village who need them.

8. Command Economy Government answers the 3 basic economic questions. All economic decisions are made by the government. Most resources are owned by the government.

9. North Korea An example of a command economy: North Korea The Government of North Korea controls all aspects of the economy. Command economies are not very successful and countries, like China, are abandoning it. Command economies are found in autocracies ( N. Korea ) and communist (China, Vietnam) countries.

10. Command Economy What goods/services will be produced? Government decides what will be produced How will goods/services be produced? Government decides how to produce Who will consume the goods and services? Who ever the government decides

11. Market Economy A market economy is also called a free market economy, free enterprise, or capitalism. Individuals decide what to produce based on supply and demand.  The quantity and amount of an item produced is based on the demand for it in the market. Individuals control the resources of a country.

12. Market Economy The 3 basic economic questions are answered by individuals. Individuals decide what to produce, how to produce and to whom to sell. A market economy relies on entrepreneurs to come up with products and services. Entrepreneurs are important to an economy, because they keep economies current and flexible. Think, SUPPLY AND DEMAND *Entrepreneur-someone who has an idea for a good or service and takes the risks to produce it.

13. Market Economy What goods/services will be produced? Individuals decide what goods/services to produce How will goods/services be produced? Individuals decide how to produce Who will consume the goods and services? Individuals decide who to sell to

14. Mixed Economy World economies have an element of 2 or more economic types. The United States is a mostly market economy. Can you name aspects of the economy that are controlled by individuals? Can you name aspects that are controlled by government? http://www.heritage.org/index/heatmap

15. Economic Continuum Gages Economic Freedom Pure MarketPure Command North Korea 1.3 Hong Kong 89.6USA 76.2 Japan 73.3 S. Korea 71.5 Israel 70.5 Turkey 63.2 Saudi Arabia 62.1 China 52.7 Vietnam 51.7 Iran 41.8 *Not ranked are Iraq and Afghanistan

16. Traditional Economy Mixed Economy Market Economy Command Economy Economic Systems Who answers the 3 basic questions? Clue word:

17. The Economic Continuum is a measure of a _____________________ economic ________________. There are no pure _______________ or ___________________ economies. Economies are considered ___________/____________ ________________, a combination of both command and market. The closer a country is to a ______________________ economy, the __________ economic freedom it has. ______________ ______________ has a command economy. Its __________________ controls all aspects of the ________________. North Korea struggles to provide for its _________________. 28 billion and GDP- per capita is $1,800. Hong Kong is an example of a ______________ _______________ economy. Its economy has ___________ government control and _________________ decide what businesses to start. GDP 381 Billion-52,700 per capita An _________________________ is an important part of a _______________ economy. Entrepreneurs help a country keep up with economic _________________. This makes a country’s economy _________________. Another aspect that keeps an economy _______________, is being ________________. Diversified mean to have a_____________ of goods and services. Oil rich countries, like the United Arab Emirates, are looking to diversify their economies. Oil is not a ___________ _______________ and will some day run out.

18. The Economic Continuum is a measure of a country’s economic freedom. There are no pure command or market economies. Economies are considered mixed/mixed market, a combination of both command and market. The closer a country is to a command economy, the less economic freedom it has. North Korea has a command economy. Its government controls all aspects of the economy. North Korea struggles to provide for its people. GDP is 28 billion and GDP per capita is $1,800. Hong Kong is an example of a Mixed Market economy. Its economy has less government control and individuals decide what businesses to start. GDP is 381 Billion and GDP per capita is52,700 per capita An entrepreneur is an important part of a market economy. Entrepreneurs help a country keep up with economic changes. This makes a country’s economy stronger. Another aspect That keeps an economy strong is being diversified. Diversify means to have a variety of goods and services. Oil rich countries, like the United Arab Emirates, are looking to diversify their economies. Oil is not a renewable resource and will some day run out.

19. Terms to know: Scarcity Lack of/short supply AbundancePlenty/a very large supply Bartertrading for goods and services without the use of money Subsistence farming that generates only enough produce to Farming feed the farmer's family, with little or nothing left over to sell Supply and how much of something there is and if it wanted Demand Mixed Marketan economy that contains 2 or more aspects of the 3 basic economic types

20. Terms to know: Free Enterprisean economic system in which private Capitalism business operates in competition and Market Economylargely free of state control. Command Economyan economic system in which government controls resources and answers the 3 basic economic questions Traditional Economyan economic system based on custom and tradition Entrepreneura person who has an idea for a product/service, and takes a risk to produce it Economic Continuuma gage that indicates the economic freedom in a country