1. Economic Systems

2. Vocabulary
Economy – a system in which people make, exchange, and use things of value
Producer – owners and workers
Consumer – the people who buy and use products

3. Capitalism
An economic system in which private individuals own most businesses
It is called a free market economy because companies are free to compete for consumer business
People save money in banks and banks lend money to people to start businesses
People may invest in, or commit money to, businesses

4. Communism
An economic system in which the central government owns most businesses
The central government sets the prices of goods and determines who may buy goods and how much they may buy
The central government determines how much workers will be paid
The central government will decide where to invest its resources

5. Mixed Ownership Hardly any nation has a pure economic system.
In capitalist nations, the government owns some businesses and in communist nations, some individuals are allowed to own small businesses
In the USA, schools and the post office are run by the government
In Cuba, a communist nation, a few people are allowed to operate small neighborhood shops

6. Vocabulary
Developed nation – Nations with more industry and more advanced technology
Developing nation – Nations with fewer industry and less advanced technology

7. Developed Nations Most people live in cities and towns
People usually work in offices and factories.
Food is usually grown by commercial farmers. They grow crops for sale rather than for their own needs.

8. Developing Nations
Developed nations do not have great wealth. They have little wealth and less advanced technology.
Most people grow their own food which is called subsistence farming. Most of the work is done by people or animals rather than machines

9. Developing nations What are some challenges in developing nations?
Diseases, food shortages, unsafe water, poor education, poor healthcare, and political unrest

10. World Trade Patterns
Countries need to trade with each other because they each have a different set of economic specialties.
Developed countries usually sell products made using advanced technology. Developing nations usually sell foods, natural resources, and simple industrial products.

11. Trade Agreements
Countries have formed trade alliances with each other to reduce trade costs.
Two examples of trade alliances are the North American Free Trade Area (NAFTA) and the European Union (EU).