1. Ch. 5: Economic Concepts Vocabulary: economics, supply, demand, barter system, money system, market economy, command economy, mixed economy, traditional economy

2. Supply and Demand Supply is the amount of goods or services a business has for sale Demand is how much of a product or service people want to buy. As supply increases demand decreases, and as demand increases, supply decreases.

3. The Effects of Supply and Demand The reason that explorers left to the New World was because of Supply and Demand. In Europe people wanted spices. Europeans started looking for a quick and inexpensive way to China and India to get spices. The explorers accidentally ran into the American continents.

4. The Effects of Supply and Demand While looking for spices, Spain discovered large amounts of gold and silver in the New World. Since there was more money in Europe, people were buying new things. Eventually, poor people began coming to the Americas in order to raise livestock and grow plants that people in Europe wanted.

5. Barter System A barter system is where people trade for the things they need or want. The Native American tribes used barter before the Europeans arrived, and often bartered deer and beaver pelts with the Europeans for guns, bullets, or cloth.

6. Money System Bills or coins are used to trade for items or services. Money was originally made of valuable metals, like gold, silver and copper, although some cultures used turquoise (a blue rock), or even shells as money. Coins today are still made of metal, but bills are made of paper. We trade paper bills not because they are made of valuable materials, but because of what the government agrees that it will buy.

7. Types of Economies Market Economy: Business owners decide what to make and sell. Command Economy: The government decides what to make or sell. Traditional Economy: People inherit the money, wealth, or resources from their families. Mixed Economy: A combination of a market, command, and traditional economy. (The United States has a mixed economy)

8. Questions about Chapter 5 1.Who determines how much money is worth? 2.What is a mixed economy? 3.What is demand? 4.What is supply? 5. What happened when Spain accidentally found the New World?