1. Government and Economic Study Guide

2. 1. Define unitary  Power flows from one strong central authority to several weak regional authorities.

3. 2. Define confederation  Independent states/countries band together for some common purpose.  They only delegate a few powers to the weak central authority.  States/countries retain considerable independence.

4. 3. Define federal  Power is divided/shared between one central and several regional authorities.

5. 4. Define Autocracy  government ruled by one person who makes all the decisions  Example: dictatorship, absolute monarchy  citizens have no say in the government

6. 5. Define Oligarchy  Government ruled by a few people  Those few make all the decisions  General citizens have no say in the government

7. 6. Define democracy  government ruled by the people  The general citizens have decision making power by voting

8. 7. What are the types of governments and economic systems of the UK, Germany, and Russia?  UK parliamentary democracy constitutional monarchy Mixed Economy  Germany federal republic Mixed Economy  Russia Federation Mixed Economy

9. 8. Why did so many countries in the EU adopt the Euro?  There are so many countries in Europe located so closely together that it makes it a lot easier to trade with the same money

10. 9. What is the main purpose of the European Union?  (1) economic protection, (2) trade

11. 10. What are the 3 basic questions that all economic systems have to answer?  What to produce?  How to produce it?  For whom to produce?

12. 11. What is a traditional economy?  An economy where the product is shared by the whole community and based on customs

13. 12. What is a pure free market economy?  Where individuals make decisions regarding the economy

14. 13. What is a pure command economy?  Where the government makes decisions regarding the economy

15. 14. What type of economic system do all European countries have?  Mixed economy

16. 15. Give an example of a country today with mostly a command economy.  North Korea  Cuba

17. 16. Which type of economy did East Germany and the former SU used to have?  Command

18. Pure Market Pure Command Russia 52% Germany 73% United Kingdom 75% 17. Where are Russia, Germany, and the UK located on the economic continuum?

19. 18. Define Gross Domestic Product  The total amount of goods and services produced in a country in a year.

20. 19. List 4 factors that affect a country’s GDP  human capital  capital goods  natural resources  entrepreneurs

21. 20. Define human capital  The value that people bring to the marketplace  Human labor

22. 21. Name two things that influence human capital  education/training  health of employees

23. 22. Give two examples of capital goods  machines like ovens, sewing machines, computers, etc…

24. 23. Define entrepreneur  a person who is willing to take a risk to create a business to sell a new technique, idea, or product

25. 24. Explain how natural resources affect a country’s wealth.  Many natural resources usually means more wealth, especially if a country has a lot of petroleum (oil)

26. 25. Give one example of a trade barrier in Europe  Tariffs  Embargo  Quota  the Alps for Switzerland  some countries don’t use the Euro  some countries may be landlocked

27. 26. Define tariff  Taxes on imports

28. 27. Define embargo  A ban on trade with a country for political reasons

29. 28. Define quota  A limit on the amount of a specific good that is imported

30. 29. What is meant by “currency exchange rate”?  The ratio between two different currencies

31. 30. What is one reason why it is more expensive to have exchange currencies from one country to another country?  Banks charge a currency exchange fee

32. 31. If Scandinavia has a high literacy rate, what does that mean about its development?  High standard of living  It will have many college graduates who are doctors, lawyers, architects, engineers, etc…it will be well developed