2.  Economic Systems must make three basic decisions: 1) What and how many goods and services should be produced? 2) How should they be produced? 3) Who gets the goods and services that are produced?

3.  In a market economy individuals and private groups make decisions about what to produce  Based on free enterprise – private individuals or groups have the right to own property or businesses and make a profit with little to no government interference  People are free to buy what they want, work where they want, and make what they want  A.K.A. capitalism

4.  No country in the world has a pure market economy  A mixed economy occurs when government supports and regulates free enterprise.  The government works to keep competition free and fair by supporting the public interests.

5.  In a command economy government owns or directs land, labor, capital (supplies) and controls the management of business  Countries with command economies believe that these rules will benefit all individuals, not just the wealthy.  Public taxes are used to provide housing and health care for all citizens, but citizens have no say in how the tax money is spent.

6.  Natural resources – occur in nature and are used in a variety of ways Renewable resources – sources that cannot be used up, such as sunlight, wind, forests, animals, etc. Nonrenewable resources – cannot be replaced such as minerals and fossil fuels  It is important to conserve nonrenewable resources and find more ways to use renewable resources

7.  There are four types of economic activities  1) Taking or using natural resources (coal mining, farming, fishing, etc.)  2) Use raw materials to create something new (assembling computers, making pottery, etc.)  3) Provide services (teachers, lawyers, truckers, fast food workers)  4) Process, manage, and distribute information (accountants, government workers, researchers)

8.  The type of economic activities a country completes impacts its overall status in the world.  The U.S. and other developed nations focus more on technology and manufacturing.  Developing nations typically focus on using natural resources and on light manufacturing.  Industrialization has taken some countries, like China, from developing to developed.

9.  Countries trade with each other all the time. Example: Apple buys products from Chinese companies, then uses Chinese workers to assemble their products  Some nations try to protect their own goods by placing a tariff on foreign goods.  In recent years many nations have pushed for free trade between nations so that goods can flow freely among countries.  NAFTA – North American Free Trade Agreement allows for free trade between the U.S., Canada, and Mexico  The EU (European Union) is a partnership between several European nations that has free trade and a common currency.