Unit 4: Economic Systems in Europe – Flashcards
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1) What to produce? 2) How to produce? 3) For whom to produce?
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What are the 3 basic questions every economic system must answer?
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Most European countries have a mixed economy. UK is mostly market economy - Russia is mostly command economy - Germany is in the middle
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What type of economic system do most European countries have?
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A pure market economy is no government rule within the economy - citizens make all economic decisions. A pure command economy is total government rule - citizens have no economic choice.
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What does it mean when the economy is pure?
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No pure market economies because there would be no rules/policies that companies had to follow, companies could sell anything (drugs). No pure command economies because citizens were unhappy begin controlled by government.
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Do pure economies still exist?
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Command economy because Germany was communist (government controlled).
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What kind of economy did East Germany and Russia have when they were communist?
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Tariff Quota Embargo
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what are the 3 types of trade barriers?
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Human resources are the skills people have to produce goods and services. To invest in these resources a country must have educated, trained, and healthy workers.
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Think about human resources - how do countries INVEST in these workers?
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A country would spend money to have new factories, purchase new technologies, update machinery. Companies would then be able to produce more so the country's GDP would increase.
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Think about capital resources - when countries INVEST in these resources, what happens to the gross domestic product (GDP)?
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They are creating businesses - which creates job - which allows for more people to create/produce goods.
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Successful entrepreneurs tend to INCREASE a nations' GDP. Why?
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1) Countries that have a high literacy rate tend to be more economically advanced with better jobs. 2) Countries that have low rates tend to be less advanced and have low income jobs.
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How does literacy rate affect a country's development?
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they have better access to the resources in the educated developed nation.
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A literate person in a developed country is most likely to have healthcare, technology, and a high paying job because....
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The GDP increases because they are producing more within and not having to import these items. This helps the countries wealth.
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Think about Natural Resources - when countries INVEST in these resources, what happens to the gross domestic product (GDP)?
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high literacy rate better jobs higher standard of living quality healthcare high life expectancy commercial farming (farming to feed thousands)
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Characteristics of Developed Nations
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low literacy rate low income jobs low standard of living poor healthcare low life expectancy subsistence farming (farming to survive)
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Characteristics of Underdeveloped Nations
