1. Economic Dictionary
Unit 4

2. What motivates people?
What motivates people to get things they want and need?
$$$$$$

3. Economic system
The way in which a nation uses its resources to satisfy people’s needs and wants.

4. Real World Example What will be produced? How will it be produced?
For whom will it be produced?
What resources do we have?
The oil rich countries in the Middle East.

5. For example…
You go to the mall and want to buy a DVD, t-shirt, & pair of shoes. You only have $10.00 so you don’t have enough resources (Money) to meet your wants
How people handle the problem of satisfying unlimited wants with limited resources

6. Command Economy
The government decides what goods will be produced, how they will be produced, and how they will be distributed

7. Real World Example
Example-communist countries like Cuba and N. Korea
-Workers get same pay so poor quality of goods
-little incentive for quality or workers

8. Traditional Economy
Economic system in which social roles (elders) and culture determine how goods are made, sold, and bought.
Resources are determined by inheritance, based on primitive methods and tools

9. People produce most of what they need to survive
Real World Example
subsistence farming
People produce most of what they need to survive
Common in poorer countries
Carpet makers, hand made crafts

10. Market Economy (capitalism)
Based on individual choices and voluntary trade
Free enterprise
Individuals and business make economic decisions

11. Real World Example
Skill, education and type of job determine salary
United States’ economy has a large portion of market economy

12. Economic system that has features of traditional, command, and market
Mixed Economy
Economic system that has features of traditional, command, and market

13. Real World Example
Most countries are mixed
United States- examples: minimum wage (government determines), quilts made by the Amish (traditional) and private owned businesses (market)

14. Voluntary Trade People trade freely
Trade is the voluntary exchange of goods, services, or both.

15. One country (US) decides to trade with Japan
Real World Example
One country (US) decides to trade with Japan
Japan has products US citizens want-electronic, cars, technology

16. Trade Barriers
Any law or practice that a government uses to limit free trade between countries. Trade barriers can be physical barriers as well.

17. Real World Example
Tariffs (taxes) and quotas
Embargos (US against Cuba)
Physical barriers could be war or landforms

18. Exchange Currency/Rate
Amount of one currency that can be purchased for a given unit of another

19. Real World Example Money is currency
Value of currency between countries changes -it affects the cost of goods between countries
Ex: In Japan it costs more yen to buy an Australian dollar so Japan pays more for Australian products

20. Currency
Money in any form that is accepted as a medium of exchange, but specially paper money

21. Real World Example
Currency is name of a country’s money- it looks different and is valued different
Euro – the common currency of most of Europe
Saudi Arabia-riyal
Israel-shekel
Japan-yen

22. Entrepreneur
Someone who brings together land, labor, and capital goods to produce goods and services

23. Business owner who thrives on free enterprise Bill Gates –Microsoft
Real World Example
Business owner who thrives on free enterprise
Bill Gates –Microsoft
Walt Disney—Disney animation company (expansion)

24. Human Capital
Knowledge and skills that allow workers to produce goods and services and earn an income.
People exchange their labor for wages.
Investing in their human capital helps people earn higher wages

25. Real World Example
College education is human capital
Trained employees
Japan’s greatest resource is the skill of their people

26. GROSS DOMESTIC PRODUCT (GDP)
Total market value of all goods and services produced in a country

27. Real World Example U What can the GDP tell you
about a countries economic development?
U. S $13 trillion
Saudi Arabia $366 billion
Japan $4 trillion
Botswana $17 billion

28. CAPTIAL
Resources that people use to make other goods

29. Real World Example
Factories
Machinery
Tools
These are key for economic growth