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Geography: Economics
Economics: Key Ideas
| Term | Definition |
|---|---|
| 3 basic questions that every economic system must answer: | What: What goods and services will be produced? How: How will goods and services be produced? Who: Who will consume goods and services? |
| 3 types of economic systems | traditional market command |
| traditional economy | All decisions are based on customs, traditions and beliefs of the past. |
| traditional economy | People will make what they always made and do the same things their parents did. |
| traditional economy | Found among small villages and native tribes |
| traditional economy | The exchange of goods is done through bartering. |
| command economy | Consists of countries that typically have a communist government that makes all economic decisions. |
| command economy | Can be harsh to live under and historically it’s been unsuccessful and often abandoned |
| A command economy is present in the following countries: | Cuba, former Soviet Union and North Korea. |
| In a command economy the government: | owns most of the property. sets the prices of goods. determines the wages of workers. plans what will be made. |
| market economy | The government has no control over this type of economy. |
| market economy | Decisions are based on changes in prices that occur as buyers and sellers interact. |
| A market economy is present in the following countries: | Australia, US, and UK |
| mixed economy | a country that has characteristics of market and command economies |
| free enterprise | competition between countries |
| producer | person or organization that creates goods and services |
| consumer | a person who uses goods and services |
| goods | an object or service that serves a human need or want |
| trade | buying, selling, and exchanging of goods and services |
| international trade | exchange of goods and services between countries |
| scarcity | limited supply of something |
| bartering | trade without the exchange of money |
| export | goods and services that are produced in one country and sold to buyers in another country |
| import | a good or service bought in one country that was produced in another country |
| incentive | financial motivators used to encourage people to take certain actions |
| tax | an amount of money that the government requires people to pay according to their income, value of property, etc. This money is used to pay for the things done by the government. |
| tariff | a tax imposed by one country on the goods or services imported from another country |
| quota | a restriction or limit on the amount of a good that can be imported into a country |
| embargo | a ban on all trade with a certain country |
| sanction | a threatened penalty for disobeying a law or rule |
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