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?