1. ECONOMIC UNDERSTANDINGS
SS6E5
The student will analyze different economic systems.

2. Compare how traditional, command, and market economies answer the economic questions of
to produce goods.

3. Economic system built on exchange and trade
Traditional Economy
Economic system built on exchange and trade
(About 400 million people
still use this method.

4. Some characteristics of a traditional economy include. . .
subsistence farming (farming mostly to have food to eat)
herding cattle; hunting and gathering
often make their own clothing and tools.
If there is more food than they need, they trade the extra for goods made by others.

5. Command Economy
When the government determines what to produce, how to produce , and for whom to produce goods and services

6. Some characteristics of a command economy . . .
where the supply and price of goods are controlled by the government
Government planners decide which goods and services are produced and how they are distributed.
The former Soviet Union was an example of a command economy.

7. An economy in which wages and prices are determined by supply and demand

8. A system which includes both ownership of businesses by citizens and some control by the government

10. Trade Barriers Quotas Tariff Embargo
Government policy or regulation that restricts international trade like a . . .
Tariff
Embargo
Quotas

11. A tariff is. . . tax placed on goods when they cross a national border
Example –
tax placed on stereo equipment shipped from China

12. Embargos
Not allowing business dealings and trade with a certain country in order to isolate it and to punish its government
Example –
The United States refuses to trade with Communist countries like Cuba.

13. Quotas
Sets a physical limit on the quantity of a good that can be imported into a country in a given period of time
Example –
a country might limit sugar imports to 50 tons per year

14. Four Factors of Production
Land
Labor
Capital
Entrepreneurship

15. Land / Natural Resources
Naturally occurring substances that are considered valuable
like minerals, coal,
lumber, etc…

16. Human Capital/Labor
Skills and knowledge
Ability to perform labor

17. Capital Goods Objects or equipment used in the production of goods
Includes factories, machinery, tools, equipment, technology and various buildings which are used to produce other products

18. Entrepreneurship Somebody who starts a new business
Someone who gives money to for someone to start a new business
Shark Tank: Young Entrepreneurs

19. Goods and Services
Goods are items you can see and touch, such as a book, a pen, a folder etc…
Services are provided for you by other people, such as a doctor, dentist, hair stylist, waiter, chef, etc…

20. All goods (items that are made) and services (acts people perform) produced within a country in a given period of time - usually a calendar year