1. Economics Vocabulary
Economics
 Natural Resource: Natural Resources are products Free Trade Agreements
of the earth that people use to meet their needs. Ex:
trees, plants, soil, water, oil, natural gas. Natural What are the different types of economic
resources can be renewable and nonrenewable. systems? How do free trade agreements
promote economic growth in many
• Renewable Resource: Renewable Resources are
those resources that can be renewed quickly and countries throughout the world?
naturally replaced. Traditional Economy: A traditional economy is an economic system that is based on
customs and traditions handed down from generations. The barter system is common • Free Trade Agreements (FTAs) help companies
• Nonrenewable Resource: nonrenewable in this type of economy. Poor developing nations fall into this category. The people compete more easily in the global marketplace.
resources are limited in the earth. Once these who participate in a traditional economy are not so much interested in making money
resources are used the earth cannot produce or wealth rather survival is the main necessity. • Free Trade Agreements help to strengthen
more for thousands of years. businesses by eliminating or reducing tariff rates and
Command Economy: In a Command economy the government makes all the easing investment rules.
 Export: Consumer goods that are created in excess economic decision. A command economy can usually be found in total controlled
and can be trade and sold on a global market to governments such as communist countries. Here the government controls what is
• FTA: The 1989 the U.S. and Canada created a Free
build economic growth. produced or grown, how much can be consumed, and the price at which items will be
Trade Agreement (FTA). This allowed Canada and the
sold. Examples: former Soviet Union, Cuba, North Korea
 Import: Consumer goods that are cannot be created United States to freely exchange products and
in excess and must be bought to supply consumer Market Economy: In a market economy, individuals make their own decision of what reduced tariffs thus lowering the cost of products.
demand. to produce, how to produce, and what goods and services will be provided. People
are free to exchange goods and services without government involvement and • NAFTA: On January 1, 1994 the North American Free
 Developed Country: A developed country Trade Agreement (NAFTA) was written. This
regulation. This economy is driven by consumer demand and supply and
understands the cycle of production and is able to document allowed Mexico, U.S., and Canada to trade
entrepreneurship is encouraged but success is not guaranteed.
balance all three essential components of
services and goods freely without having to pay extra
production increasing wealth and trade.
Mixed Economy: A mixed economy is a combination of many types of economic taxes called tariffs. This agreement touched off a
 Developing County: A developing country has a poor systems. Most strong developed economies have a mixed economy that share to a dramatic increase in trade and economic integration
or weak economy. This type of country struggles to small extent a mixture of traditional values, command/government control, and a in the Northern Hemisphere.
free market economy. To the world the United States is a market economy but to
find a balance in the cycle of production.
citizens of America we have a mixed economy. Our government does place certain
 Currency : A country’s form of money or cash. restricts on how, when, and how much we are allowed to buy and produce but
citizens have the freedom of choice.
Cycle of Production Driving Factors of Production
What are the necessary components needed to drive
Barriers to Trade What are the three components of the cycle of
production?
production that influence economic growth?
What trade barriers limit trade with countries
• Producers: those who produce products for consumption.
throughout the world? Natural Resource: A natural resource is a resource that is naturally produced by our Earth.
 Tariffs: tax added to the price of goods that are
Natural resources can be both renewable and non-renewable. • Consumers: those who consume produced products.
imported making the price of products go up. Capitol Resource: Capital resources are the tools that help turn a natural product into a • Supply: The amount of products produced.
consumer good. Ex: Bulldozer, Semi-Truck, Factory
 Quota: A limit on how many items and quantity can be
• Demand: The want or need for produced products.
imported or exported. When supply is limited price will Human Resource: A human resource is the work force that uses the capitol resources
go up. (tools) to turn products into consumer goods. You must have an educated work force that
• Literacy Rate: The higher the literacy rate is the higher
knows how to use the capitol resource correctly in order to produce a consumer good. the production. Low literacy = low production. Canada
 Embargo: A complete trade block usually for political and Europe have high literacy rates.
purpose such as war time.