European Economic Growth Factors

European Economic Growth Factors

Essential Question: What factors influence a country's economic growth?

Economic Check Point

• Economics is the study of how a market makes, distributes, and consumes products and services.

• What are the 3 basic economic questions:– What to produce?– How to produce?– For whom to produce?

Gross Domestic Product (GDP)

• The total value of all the goods and services produced in a country in a year.

• Use to tell how rich/poor a country is.

• Often an indicator of Standard of Living (just like the literacy rate)– …it’s like a big (imaginary) calculator that

keeps track of all the money spent in a country in a year.

Top 5 highest GDPs on Earth

YEAR 2010

1 European Union $14,820,000,000,000

2 United States $14,660,000,000,000

3 China $10,090,000,000,000

4 Japan $4,310,000,000,000

5 India $4,060,000,000,000

Bottom 5 lowest GDPs on Earth

YEAR 2010

223 Tuvalu $36,000,000

224 Montserrat $29,000,000

225 Tristan da Cunha $18,000,000

226 Niue $10,010,000

227 Tokelau $1,500,000

GDP per capita

• When you take the GDP and divide it by the population of that country.

• Is a more accurate picture of how much $$ a country has compared to the GDP

Top 5 highest GDPs per capita

YEAR 2010

1 Qatar $179,000

2 Liechtenstein $141,100

3 Luxembourg $82,600

4 Bermuda $69,900

5 Singapore $62,100

*USA is # 47 with $47,200

Bottom 5 lowest GDPs per capita

YEAR 2010

223 Eritrea $600

224 Zimbabwe $500

225 Liberia $500

226 Democratic Republic of the Congo $300

227 Burundi $300

*All in Africa

Private vs. Public Businesses

• Public means it is owned by the government

• Private means it is owned by citizens

Entrepreneur/Entrepreneurship

• Entrepreneurs are individuals who take risks in an economy by starting new businesses.Why do you think it is more difficult for entrepreneurs to act in a command economy?

Human Capital/Resource

• The skills that humans have to build things or perform services.

• Examples:– Education– Training – Health of Workers

Capital Good/Resource

• The things needed to make other goods

• Examples:• Machines

– Ice machine– Coin press

• Factories– A car manufacturing plant

• Technology– Computers– Software

Russia’s Economy

• Russia has had to shift from a command economy following the fall of their

communist economy.

• They have moved towards a mixed market economy.

• During this shift Russia has struggled with high unemployment, a fall in

value of the Russian currency (the Ruble), and inflation being high.

• Russia has oil and sells it to other countries.

• Russia has a skilled labor force, and it’s gross domestic product* (or GDP)

has been on the rise for the past few years, this gives hope that their

economy will be strong soon.

*GDP is the value of the goods and services produced in a nation within a year.

Germany’s Economy• The reunification of East and West Germany has caused economic

difficulty in Germany.

• Germany had to combine two very different economic systems. East

Germany had a command economy, while West Germany had a mixed

economy.

• They have combined a free market, some governmental control, and

social welfare (to help the poor) to create a new mixed economy called

a social market economy.

• Germany’s combined industrialized economy has become one of the

strongest in Europe.

• Germany has a high literacy rate that reflects the high quality education

required of Germany’s children, this investment in it’s people helps the

economy.

United Kingdom’s Economy• The UK has a mixed market economy

• The government controls some economic activity while private

companies control others.

• The UK has a welfare system, socialized medicine, and the

government is involved in overseeing fair business practices, banking,

and the supply of money.

• Service Industries (banking, insurance, etc.) make up the largest part

of their GDP.

• The discovery of oil in the North Sea has helped the UK be less

dependent on other nations.

• The people of the UK have a high standard of living, and the literacy

rate is among the highest in Europe.

International Trade

• The sale of goods or services across country borders

• Trade between different countries

Trade Barrier

• Barrier=wall

• Something that prevents trade

• Examples:– Tariff– Quota– Embargo– Geography (geography that prevents

easy trade, like mountains, oceans, etc.)

Embargo

• A government order prohibiting the movement of merchant ships/planes/trading into or out of its ports.

• A government restriction on trade with a foreign nation.

Quota

• The amount of something that is allowed or admitted

• Examples:– A restriction on the quantity (number) of a good that

can be imported during a specific time period would be called an “import quota”.

– If the United States government only allows 50 tons of corn to be imported into the US each year, this would also be called an “import quota”.

– If your teacher has given you 20 minutes to work on an assignment, your “time quota” is 20 minutes.

More QUOTA examples

• Money Quota: Your parents give you $20 a week to spend. Once you spend all $20, you have met your “money quota”. You will not receive any more money until next week.

• Paper Quota: Your job only allows you to use 1,000 sheets of paper per year. If you use all 1,000 sheets, then you have met your “paper quota”. You will not receive any more paper until next year.

Tariff

• a tax that the government puts on imported or exported goods.

Voluntary Trade

• Same as international trade, but the countries both benefit from trade and they voluntarily decide to trade with one another

Currencies of Europe

• Something you exchange for goods or services

• The money in circulation in any country

Currencies of Europe

• France, Italy, and Greece use the Euro.• The Euro has pictures representing each of it’s member

nations, much like our quarters for each state, here in the U.S.A.

• Below are Euro coins.

All coins have the same front design

These are some of the back designs for the 1euro piece representing

different EU nations.

France Italy Germany

Currencies of EuropeSS6E6d

• Here are pictures of the Euro paper currency.5 euro 20 euro10 euro 50 euro

200 euro

100 euro

500 euro

Currencies of Europe

• Russia’s currency is the Ruble.

Unofficial Ruble Symbol

Original Ruble Symbol

1 Ruble5 Rubles 50 Rubles

Currencies of Europe

• Poland’s currency is the zloty.

10 zloty 20 zloty 100 zloty 200 zloty

5 zloty

Zloty Symbol