1. Unit 2C: Africa’s economics
Study Guide Review

2. SS7E1
Compare how traditional, command, and market economies answer the basic economic questions: WHAT TO PRODUCE, HOW TO PRODUCE, & FOR WHOM TO PRODUCE.
WE HAVE HAD THIS STANDARD ALREADY…IT IS REVIEW!!!!

3. Number 1: The Chart Decisions made from customs and traditions
Traditional
Command
Decisions made from customs and traditions
Goods are usually produced for personal use
Subsistence Farmers
BARTERING & TRADING IS THE STANDARD PRACTICE
EVERYTHING is planned by the government
NO PRIVATE BUSINESS
NO ENTREPRENEURS

4. Number 1: The Chart The “market” makes the decisions
Buyers are the market
Sellers are the market
Entrepreneurs are the market
Individuals experience profits and losses

5. #2: Why are most countries MIXED?
All countries have some amount of government control.
All countries have some amount of private ownership

6. #3: What is an ECONOMIC CONTINUUM?
A scale that SHOWS where a country’s economic system lies between PURE MARKET & PURE COMMAND
COMMAND
mARKET

7. #4: Compare & Contrast the economic systems of Nigeria & South Africa.
Some government control
Strong economy
Goods: platinum, diamonds, gold
Exports: gold, diamonds, minerals
GDP/capita: $10,700
Unemployment: 23.4%
Economic Freedom Index: 70- MODERATELY FREE
Poorly organized
Some private ownership
Goods: Oil & Petrochemicals
Exports- Oil & Petrochemicals
GDP/capita:$2,400
Unemployment: 21%
Economic Freedom Index: MOSTLY UNFREE

8. #5. What type of economic system do both countries have?
Mixed
#6. What is S. Africa’s main economic problem?
Unemployment- almost ¼ of the population is not working

9. #7. Where are they on the continuum?P U R E M A K T P U R E C O M A N D S O U T H A F R I C 7 N I G E R A 1 6 U S A 10

10. Another continuum

11. #7. Why put them there?
South Africa- has more private ownership and less government control
Nigeria- just beginning to allow private ownership
Problems with government corruption- Oil industry

12. SS7E2: TRADE #8. 3 TYPES OF TRADE BARRIERS: TARIFF, QUOTA, & EMBARGO
#9. How are they different? They all limit trade but in different ways
#10. Importance of specialization in international trade- NO country is COMPLETELY self-sufficient; they can’t produce ALL goods and services they need so they have to TRADE with each other

13. SS7E2: TRADE
#11. Voluntary Trade- It promotes SPECIALIZATION which usually leads to better production and more profits; this increases the GDP
#12. Tariffs helping the economy- Tariffs discourage people/businesses from buying imported goods b/c the prices will be higher from tariffs. Tariffs, therefore, encourage buying domestic goods for lower prices

14. SS7E2: TRADE
#13. Embargoes against South Africa- The United Nation’s members STOPPED trade with South Africa until they ENDED APARTHEID.
SS7E2b
#14. CURRENCY- is money
#15. EXCHANGING CURRENCIES- is needed to make sure that the money has a dependable value and the trade is fair

15. SS7E3a Human Capital
#16. Investing in HUMAN CAPITAL- by training and educating the workers
#17. Effects of investing in human capital on GDP- the more countries invest in training and skills of workers, the higher the profits; the higher the profits, the more valuable to goods and services; this INCREASES the GDP.
#18. South Africa invests in HUMAN CAPITAL- by making sure the mine and electronics workers are well trained.

16. SS7E3a
#19. Why SHOULD Nigeria have a strong economy? b/c they have a lot of oil and a system of education so the GDP/capita should be higher
#20. Not investing in Human Capital- if workers are unskilled they will not make a good income and will not spend money on buying goods and services~ which puts money into the economy

17. SS7E3b: Capital Goods
#21. South Africa’s investment in capital goods- spending money on new technology and equipment for mining and the auto industry
#22. Nigeria’s investment in capital goods- they have spent SO MUCH money for new technology for oil production that they have not spent $ on agriculture. 70% of the people work in agriculture and live on less than $1/day

18. Capital Goods
#23. Importance of investing in capital goods- good technology increases production; more production increases profits; higher profits increase the GDP
#24. Nigeria’s investment in capital goods- has left no $ for MOST of the people; poor food supply and housing

19. SS7E3c
#25. Uses of Uranium- nuclear weapons, nuclear energy, photographic chemicals
#26. The World’s Uranium Supply- 20% is in Africa
#27. Negative Effects of Nigeria’s economic development- Oil has not strengthened the economy
#28. Why?- most of Nigeria’s money goes into the oil industry. 80% of the people are not in the oil business

20. Africa’s Resources
#29. Africa’s most valuable resources- Diamonds and gold
#30. Why haven’t S. Africa’s diamonds been ‘bad’? Strict regulation of the diamond business- no ‘blood diamonds’ from S. Africa
#31. Effects of Conflict Diamonds- Conflict diamonds are sold illegally to provide weapons for rebel groups / conflicts/ wars; supports chaos and killing

21. RESOURCES
#32. South Africa’s gold- 40% of the world’s gold is found there
#33. Effects of S. Africa’s gold- They have been able to use the $ to provide some resources for people but not enough for AIDS/HIV
#34. Entrepreneurs- takes financial risks to have new business; THEY reap profits & losses of the risks
#35. Influence of entrepreneurs influence economic growth- they create new jobs which increases the GDP, unless the business fails