Command Economy – The government owns most of the resources and determines the production of goods...

Command Economy – The government owns most of the resources and determines the production of goods and services.

Market Economy – Production of goods and services is determined by the demand from consumers. Also called “capitalism.”

Mixed Economy – A combination of market and command.

Three Levels

Primary

Secondary

Tertiary

Primary Activities

(Dealing directly with natural resources.)

Examples:

• Fishing

• Farming

• Forestry

• Mining

Secondary Activities

(Manufacturing and processing.)

Examples:

• Steel mills

• Automobile assembly

• Saw mills

Tertiary Activities

(Services)

Examples:

• Transportation

• Retail sales

• Information Technology Services

1. Different levels of natural resources

• Renewable—Soil, water, forests

• Nonrenewable—Fossil fuels (oil, coal, natural gas) and metals (gold, iron, copper, bauxite)

2. Human resources

• Level of education

• Level of skills.

• Entrepreneurial and managerial abilities

3. Capital resources

• Level of infrastructure

• Availability and use of tools, machines, and technologies

• Availability of money for investment

How advanced an economy is.

Why are some country’s economies more developed than others?

Why are some country’s economies more developed than others?

Why are some country’s economies more developed than others?

The purpose of a colony is to provide natural and human resources to enrich the “motherland.” The

people of the colony usually do not share the wealth.

Many of the world’s poorest nations were once colonies of imperial powers?

MEASURING THE ECONOMYMEASURING THE ECONOMY

The value of all goods and services produced The value of all goods and services produced in a nation in a year.in a nation in a year.

GDP divided by total population.GDP divided by total population.

Source: World Bank

G-7 nations: United States, United Kingdom, France, Germany, Italy, Japan, Canada.

The merging of regional economies in which nations become interdependent on each other.

How does globalization effect your life?

• Cheaper products

• More competition for jobs

A trading nation’s ability to produce something at a A trading nation’s ability to produce something at a lower cost than another trading nation.lower cost than another trading nation.

Portugal

• 2 hours to produce 1 jug of grape juice.

• 6 hours to produce a yard of cloth.

Germany

• 4 hours to produce 1 jug of grape juice.

• 3 hours to produce a yard of cloth.

Make and trade grape juice.

Make and trade cloth.