1. ECONOMIC TERMS AND SYSTEMS American Studies

2. Practice Question  Economies must address how to produce goods and services. In the economy of a certain country, some factories are owned by individuals and private companies, and other factories are owned and controlled by the government. What type of economy does this country have?  A. mixed  B. market  C. traditional  D. command

3. Traditional Economy  Primitive or outdated system  Focused mostly on agriculture  Economy based on traditions, customs, and beliefs of certain cultures  Usually in rural and under-developed areas  Examples: Tea plantations in Southeast India, native farming communities in Peru, etc.

5. Market Economy  All economic decisions are made by individuals, not the government  Economic/production decisions and prices are based on supply and demand  Some laissez-faire (hands-off) and others have some government regulation  Examples: US, Great Britain, Canada  Many market economies still have some government directed economic planning so they are actually mixed economies

6. Command Economy  Planned by central authority  Government based/owned production  Need-based distribution of goods and resources  Examples: China*, Russia*, Cuba, North Korea

7. Practice Question  Economic systems answer the question of how goods and services are produced. What is one way a country could change form a command economy to a market economy?  A. if the government takes control of family-owned farms  B. if privately owned banks become subject to stricter regulation  C. if agricultural and factory workers are required to join labor unions  D. if industries that had been owned by the government become privately owned

8. Mixed Economy  Some parts of production controlled by individuals, other companies controlled by the government  Capitalism: Private ownership of means of production, working for profit in competitive system  Communism: Classless, stateless social structure with common shared ownership of means of production  Socialism: Social ownership, goods produced for use not profit/wealth accumulation, distribution of goods depends on individuals contribution to society

9. Practice Question  Which statement correctly describes the role of the government in a country with a mixed economy?  A. the government allows economic decisions to be made by the society’s traditions and customs.  B. the government makes all decisions regarding the production and distributions of goods.  C. the government makes some of the production and distribution decisions, but other economic decisions are made by individuals.  D. the government exercises no decision making in economic matters; production and distribution are determined solely by individuals.

10. Economic Terms  Trade:  Goods:  Services:  Interdependence:  Supply:  Demand:  Deficit:  Surplus:

11. Economic Terms  Standard of Living:  Tariff:  Exports:  Imports:  Resources:  Cost:  Market:  Capital: