1. SECTION 4.1 WHAT IS AN ECONOMY? Chapter 4: Global Economics

2. What You’ll Learn What is meant by the term economy? The factors of production The three basic economic questions The difference between a market economy, command economy, and mixed economy. Different types of economic philosophies.

3. What is an Economy?? An economy, or economic system, is the way a nation make economic choices.  Resources – all things used in producing goods an services.  Also known as Factors of Production, which includes: Land – everything on the earth that is in its natural state Labor – all the people who work in the economy Capitol – money needed to start and operate a business Entrepreneurship – skills of people who are willing to risk their time and money to run a business Infrastructure – physical development of a country, including its roads, ports, sanitation facilities, and utilities  Scarcity – the difference between wants and needs and available resources

4. How Does an Economy Work? Nations must answer three basic questions when deciding how to use their limited resources: 1. What goods and services should be produced? 2. How should the goods and services be produced? 3. For whom should the goods and services be produced? Market Economies Command Economies Mixed Economies Capitalism Socialism Communism Economics in Transition

5. Activity Name and provide examples of the four resources of all economies and to tell which, if any, they are part of at the present time.