Warm-up 9/10 How does the economy impact your life? Answer in your binder!

Warm-up 9/10

•How does the economy impact your life?

• Answer in your binder!

What is Economics?

• Economics- production, distribution, and use of goods and services– The study of how people meet their needs

3 Types of Economic Systems

1) Market

2) Command

3) Traditional

Market Economy

• Decisions made by individuals (what to make, sell and buy) supply and demand

• Based on trade and competition• Also called free markets or capitalism• Some government regulation (laws, taxes)• USA, Great Britain, Canada, France, and Japan

have a market economy

Command Economy

• Central government alone makes decisions– Also known as communism

• No incentive to work harder• Dictates lives of individual workers• Manages all elements of production• China, Cuba, Vietnam, and North Korea are

the world’s major communist countries

Mixed

• In a mixed economy, business owners make decisions but there is strong government regulation

Traditional

• Economy based on agriculture• Most families in a traditional economy only

grow enough for themselves• Traditional economies are usually poor. The

people concentrate on survival, not making money

• Usually found in 3rd world countries• Bangladesh and Ivory Coast still have traditional

economies

GNP• GNP (Gross National Product)- The value of all

goods and services a country produces in one year

Rank Country/Region GNP (US $)

World 72,689,734,000,000

1 United States 16,244,600,000,000

2 China 8,358,400,000,000

3 Japan 5,960,180,000,000

4 Germany 3,425,956,000,000

5 France 2,611,221,000,000

6 United Kingdom 2,471,600,000,000

7 Brazil 2,254,109,000,000

8 Russia 2,029,812,000,000

9 Italy 2,013,392,000,000

10 India 1,875,213,000,000

GDP• GDP (Gross Domestic Product)- How much

each individual produces within a yearGNP divided by the population = GDP

Rank Country US $

1 Qatar 98,814

2 Luxembourg 78,670

3 Singapore 64,584

4 Norway 54,947

5 Brunei 53,431

6 United States 53,101

—  Hong Kong 52,722

7 Switzerland 46,430

8 San Marino[6][7] 44,480

9 Canada 43,472

10 Australia 43,073

Supply and Demand

• We use Supply and Demand to determine how much goods will cost

• The more of something you have, the less valuable it becomes

Cultural Diffusion

• The spread of cultural characteristics– Foods, music, clothing, ideas, technology

Think!

• How can the presence or absence of natural resources and arable land affect a nation’s economy, regardless of the type of economic system?