ECONOMY PART II
ECONOMIC SYSTEMS
•Communism (command)- government decides what needs are
to be met, found in unlimited governments
•Free Enterprise (market)– consumers decide what to produce
and purchase, prices are determined by supply and demand,
found in limited governments
• Socialism (mixed)- some businesses and industries are
controlled by the government; government provides many
health and welfare benefits, found in both limited and unlimited
governments
The main purpose of any economic system is to produce and
distribute goods and services.
PROBLEMS THAT ALL ECONOMIC SYSTEMS FACE:
SCARCITY
Examples:
Lack of natural resources
Lack of workers(labor resources)
Lack of money(capital resources)
Lack of consumers
Lack of technology
Scarcity creates barriers to economic development.
ECONOMIC INDICATORS
Economic Indicators are measures that show how a
country’s economy is doing.
Most common:
Life Expectancy: the average age to which people in a country lives
(gives clues about health care and nutrition.
Literacy Rate: shows the percentage of a country’s people who can read
or write at an elementary school level.
Gross Domestic Product: the yearly average value of all goods and
services produced within a country. GDP per capita (per person)
Country
Life Expectancy
Gross Domestic
Product per Capita
Literacy Rate
Canada
81.38
$39,400
99%
Cuba
77.7
$9,900
99.8%
Mexico
76.47
$13,900
86.1%
Peru
72.47
$9,200
92.9%
DEVELOPING VS. INDUSTRIALIZED
Developing Nations are countries with low levels of development. It is
marked by few jobs in industry, poor services, low literacy rates, and low
life expectancy.
Industrialized Nations are countries with high levels of development.
It is marked by high quality education, advanced health care, good
services, advanced technology and decent salaries.