Economics

Economicsthe
study of the
production,
distribution,
consumption and
exchange of goods
and services.

Economic Geography
Economic Geography how
people use Earths resources, how
they earn a living and how goods
are distributed

Goods - material objects that

people want to pay for,
such as the newest game
console.

Services - activities that

people do for others
for a fee.

Economic Activity
Primary Activities directly use
(harvest/extract) natural resources and
raw materials (agriculture, forestry,
mining)

Economic Activity (Cont.)

Secondary Industries primary industry
materials finished goods useful to
consumers (manufacturing)

Economic Activity (Cont.)

Tertiary Industries service industries
services to primary and secondary
industries (stores, restaurants, banking,
insurance , transportation)

Economic Activity (Cont.)

Quaternary Industries service
providers w/ specialized skill or knowledge
to help P, S, T Industries (information
research/management)

Indicators
Gross National Product (GNP) total value
of *final* goods and services produced by a
nation in a year regardless of location
(goods/services of a certain national origin)
Gross Domestic Product (GDP) - total value
of goods and services produced within a country
in a year (regardless of country of origin)

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Indicators
Per-Capita Income the average amount of
money earned by each person in a country
Literacy Rate percentage of people able to
read and write at a specified age
Infrastructure basic support systems needed
to keep an economy going (power,
communications, transportation, water,
sanitation, education systems)

Indicators (cont.)
Poverty-Rate the percentage of the
population below poverty level (determined by
govt) (p. 54)
http://www.census.gov/prod/2008pubs/p60-235.pdf

Health Insurance Coverage

Number/percentage of people covered by
health insurance (p. 74)
http://www.census.gov/prod/2008pubs/p60-235.pdf

Developed vs. Developing Countries

Developed Countries European nations, US, Canada, Japan,
Australia, Singapore
Characteristics:
Universal education
Universal Health care
Manufacturing & service industries
Control of international trade
Developing Countries African nations, S./C. American
nations, SE Asian nations
Characteristics:
Low literacy rates
Limited health services
Subsistence farming limited industry
High poverty/unemployment rates
Targets of resource/labor exploitation
**Emerging Mexico, Brazil, Argentina, Hungary, South Korea

How can a developing country

improve its economy?
Harness natural resources: oil, minerals,
valuable crops
Without such natural resources future is bleak

Receive foreign aid ease suffering/create

dependency
Fair Trade Agreements with Multinational companies
build factories in developing countries
Industry/jobs to developing country
Inexpensive raw materials and labor low cost
Harmful effects on local culture/economy/environment

Economy Types

What is a traditional economy?

A traditional economy is an economic system in
which answers to questions like Who? How? What?
and For whom?
are all made on the basis of customs, beliefs, religion,
habit, etc.

Market Economy Free Enterprise, Free Market

- Consumers (people) demand and choice determine
what and how much will be produced
- Private ownership of property and industry is encouraged.
- Risk-taking is incentivized with the reward of profit (wealth).
- Competition between consumers and producers indirectly
regulate the market (prices, wages, quality, quantities)
- Creates an unequal distribution of wealth (wealthy minority,
small middle class and large class of working poor)
- Role of government is limited (protecting property,
distributing risk), but essential.
- Capitalism is an example of this.

Command/Planned Economy
- Central government has near complete control over
all economic decisions such as what and how much is made,
how much things will cost, how much workers get paid, etc.
- Government owns most forms of major production
(making things).
- Extensive private ownership and profit at the individual level
is discouraged or regulated by the central government
collective/public/government ownership is encouraged
- Government regulates toward a more equal distribution of
wealth, stable employment, inventory levels, etc.
- Command economies are more stable and less susceptible to
market-driven fluctuations (up/down).
- Communism is one example of this.

Mixed Market Economy

- Combination of Command and Market Economies
- The economy attempts to function for the benefit of all
people (wealthy & poor)
- Government attempts ensure a large middle class of people
(discouraging large wealth gaps between rich and poor) by
encouraging the availability of basic medical care, public
education, unemployment insurance, retirement/elderly care
family services, etc. AND discouraging
- Government owns/controls/regulates core/basic industries
(such as healthcare, transportation, communication, banking,
coal mining, and steel production)
- Private companies own all other forms of production.
- Social Democracy is an example of this.