Economy and Economic systems

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  • 1. Economy and Economic Systems Flipped Lesson Please take notes on the page titled “What is Economy?” in you Unit 2 packet.
  • 2. What is Economy??? Economy is the way a country uses its money and resources (such as workers and land) to produce, buy, and sell goods and services.
  • 3. Vocabulary  Life Expectancy: the amount in years the average person can expect to live when they are born  Gross Domestic Product (GDP): total amount in dollars of products a country can produce in one year. (Foods, services, trade, money earned by workers)  Per Capita: amount per person (average)  Literacy Rate: percentage of adults that can read and write
  • 4. Vocabulary  Developed: economically and technologically advanced, contains all types of industry  Developing: little or no modern technology, working to improve their economy for the health and safety of their people  Underdeveloped: little to no infrastructure (buildings, roads, etc.) and economy is based on agricultural industry. Very low life expectancy and literacy rates, extreme poverty  Industry : areas of economic activity
  • 5. Economy  Most of the time a country’s economy depends on it’s development.  Countries with higher life expectancy, GDP and Literacy Rates tend to be more developed countries  Countries with low life expectancy, low GDP, and low literacy rates tend to be underdeveloped countries.
  • 6. Types of Industry  Agricultural - primary industry, take a natural resource from the earth. Ex: Farming, mining, oil  Manufacturing – secondary industry, taking a natural resource and making a product out of it Ex: Oil sent to a refinery to make gasoline  Retail – tertiary industry, Products made in manufacturing to sell in stores. Ex: Gasoline made in refinery sold at the gas station  Wholesale – sell of goods to anyone other than the standard single consume. Ex: Costco – pay a membership and buy in bulk  Research – quaternary industry, gathers information for
  • 7. Types of Economy  Now that we know about the factors that helps us determining the type of economy a country has lets talk about the different types of economic systems…  Free-Enterprise  Socialist  Communist
  • 8. Free Enterprise  Individual companies make important economic decisions  Companies decide the price of goods and how much of a product is produced  Follows the law of supply and demand  Individuals own private property and decide what jobs they will have
  • 9. Socialist  government functions as a democracy, but it has a large role in people’s lives  It uses tax money to take care of many of its people’s needs: health care, college tuition, maternity leave, etc.
  • 10. Communist  Government owns the property  Government sets the prices and wages  Government tells people what jobs they will do  Government tells industry how much to produce  Sometimes this is referred to as a “command” economy  Government typically focuses money towards the military and not the people