Name: _______________________________ Date: _______________ Period: _______
Middle Eastern Economies Guided Notes
GPS: SS7E5a. Compare how traditional, command, and market economies answer the economic
questions of (1) what to produce, (2) how to produce, and (3) for whom to produce.
Economics Review
• How many basic types of economic systems are there?
• 3
• Name the economic systems:
• Command Traditional Market
• Which system are most countries in the world?
• Mixed
Traditional
• Most economic decisions are based on custom and habit.
• Found in rural areas where people depend on their extended families
– Work is often subsistence farming, herding animals, or working in simple crafts and trades.
– Little money ever changes hands in a traditional society.
– Bartering is how people usually pay for goods and services.
• No country today has a traditional economy – but some areas of SW Asia still practice it (Bedouin, for
example)
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313. In a traditional economy, how are economic decisions made?
A. custom and habit
B. government planners
C. consumers and the market
D. combination of consumers and government planners
Command
• More centralized economy – government planning groups make most basic economic decisions
– Which goods & services should be produced
– Prices for goods and wages paid to workers
– What jobs workers do
– How & where goods would be sold
• No individuals can start their own businesses
• Government owns the places where goods are made
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314. In a command economy, how are economic decisions made?
A. custom and habit
B. government planners
C. consumers and the market
D. combination of consumers and government planners
Market
• Economic decisions are made by individuals who decide what to produce and what to buy
• Also called capitalism, free enterprise, and laissez-faire (French – means “to allow them to do as they
please”
• Many SW Asian countries use a market system.
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316. In a market economy, how are economic decisions made?
A. farmers
B. custom and habit
C. government planners
D. consumers and the market
317. Who takes on the financial risk in starting a new business in a market economy?
A. consumers
B. government planners
C. individual business people
D. combination of government planners and individual investors
GPS: SS7E5b.: Explain how most countries have a mixed economy located on a continuum between pure
market and pure command.
Mixed
• Blend of command and market economy characteristics
• Most SW Asian countries have a mixed economy.
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318. Why are most modern economies referred to as mixed?
A. Poverty is always highest in countries with market economies.
B. Government planners do not know how to handle economic problems.
C. Products made by traditional economies have no markets in the modern world.
D. Most countries have aspects of all 3 economic types at work in their economies.
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319. Why do most countries today operate somewhere between a market economy and a command economy?
A. Most consumers want government control of the economy.
B. Government control makes a market economy more profitable.
C. Government control of some aspects of the economy has never been successful in the modern world.
D. Most economies have found they need a mix of free market and some government control to be
successful and protect consumers.
GPS: SS7E5c.: Compare and contrast the economic systems in Israel, Saudi Arabia, and Turkey.
Israel
• Small desert country along Mediterranean Sea
• Lacks farmland and natural resources, so…
• Economy is based on advanced technology
Israel
(1) What to produce?
A large portion of Israel’s GDP comes from high tech manufacturing, financial services, and agriculture.
(2) How to produce?
Israel has a lot of government ownership of business, but is gradually allowing individuals to own companies.
(3) For whom to produce?
Israel’s private sector produces goods and services for domestic and international markets based on the market
price system.
Turkey
• Northwestern part of the Middle East
• Between Asia and Europe – has been a center of trade for 1000s of years
• Has less economic freedom than Israel – government controls telephone and TV industries
Turkey
(1) What to produce?
Turkey has an economy with many large service, manufacturing, and agricultural sectors.
(2) How to produce?
Since the late 1980s, Turkey has gradually moved from a government directed economy to more private
enterprise.
(3) For whom to produce?
1/5 of Turkey’s production is exported. The remainder is consumed by domestic consumers and the
government.
Saudi Arabia
• Large desert country
• Rich oil reserves allow Saudis to buy most of the goods they cannot produce themselves.
Saudi Arabia
(1) What to produce?
Saudi Arabia is the world’s leading producer of oil. The Saudi government continues to invest in industrial
production. It is a leader in petrochemicals, mining, and refining.
(2) How to produce?
• Over 95% of the oil industry in the country is operated by the government (the king). Most major
industries are operated by the government.
• 1/3 of Saudi Arabia’s workers come from other countries.
• The government has used oil profits to invest in technology development and services for the people.
3) For whom to produce?
1/3 of Saudi Arabia’s GDP is based on exports to other countries (This is due to the economy’s reliance on the
oil sector).
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320. The economies of Israel, Saudi Arabia, Turkey, and Iran could best be described as
A. Mixed
B. Market
C. Command
D. Traditional
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321. How have the Israelis made up for their lack of natural resources?
A. They have put everyone to work and have no unemployment.
B. They have relied primarily on farming to keep their country strong.
C. They have developed strong technology companies in their economy.
D. Israelis have refused to import oil, saving huge amounts of money each year.
322. Which industry does the government of Saudi Arabia heavily control?
A. oil
B. agriculture
C. technology
D. textile manufacturing
323. How has the Saudi king used the profits from oil to help other areas in his kingdom?
A. Money is distributed directly to all Saudi citizens.
B. The king has ended unemployment in Saudi Arabia.
C. Oil profits have paid for modern technology and services.
D. The king has let the Saudi people decide how to invest oil profits.
Specialization and Trade
GPS: SS7E6a.: Explain how specialization encourages trade between countries.
Specialization
“Do what you do best; trade for the rest!”
Countries specialize in producing the goods and services they can make most efficiently so they can trade them
for goods made by others that cannot be produced locally.
Specialization
• In SW Asia, some countries are very rich in oil and natural gas.
• They do not have farmland; it is hard to produce enough food.
Specialization
Saudi Arabia
Israel
Specializes in production of oil
• Does not have oil wealth
and gas and sells these products
• They have become leaders in
at great profit on the world
agricultural technology – even
market.
though (or because) they have a
• They use the money to buy food
limited supply of arable land.
CRCT Test
Prep
page
111
and technology that will make
• They sell the technology to earn
324. What
is “economic
their
little bit ofspecialization”?
farming more
money to supplement the food
A.efficient.
directly swapping goods from one country to another
without having to use money
they produce.
B. trying to avoid investing in industry and technology because of the expense involved
C. producing all goods and services needed for a country’s growth, so that trade with other countries is
not needed
D. producing goods a country can make most efficiently so they can trade them for goods made by
others that cannot be produced locally.
325. Saudi Arabia specializes in the production of
A. oil and gas.
B. oil and sugar.
C. olives and oranges.
D. beef and chicken.
326. Israel specializes in
A. medical technologies.
B. industrial technologies.
C. scientific technologies.
D. agricultural technologies.
•
Name: __________________________________ Date: _________________ Period: _______
Trade Barriers
GPS : SS7E6b.: Compare and contrast different types of trade barriers such as tariffs, quotas, and
embargos.
Barriers to Trade
• A tariff is a tax placed on goods that one nation imports from another.
• Many nations use tariffs to protect their industries from foreign competition.
• Tariffs provide protection by acting to raise the price of imported goods.
• Thus, tariffs encourage domestic firms to increase their production, and consumers are forced to pay
higher prices for the protected goods.
Import Quotas
• Quotas set a limit on the amount of certain goods that can be imported into a country.
• They tend to work better than protective tariffs, which do not always stop consumers who are willing to
pay a higher price for an imported good.
Embargo
• An embargo is a government order stopping trade with another country.
• Sometimes a government imposes an embargo to express its disapproval of actions taken by another
government.
• The embargo is intended to pressure the offending government to change its actions.
The U.S. is considering a full trade embargo against Iran – because of Iran’s nuclear program.
• 1973 – Arab nations attacked Israel.
• The U.S. supplied Israel with weapons to fight.
• In response, OPEC had an oil embargo against the U.S. until 1974.
• The result was an oil crisis.
– Oil went from $3/barrel to $12/barrel (it’s $99 today!) Gas prices went from a quarter to a dollar.
1973 OPEC Oil Embargo
• 1973 – Arab nations attacked Israel.
• The U.S. supplied Israel with weapons to fight.
• In response, OPEC had an oil embargo against the U.S. until 1974.
• The result was an oil crisis.
– Oil went from $3/barrel to $12/barrel (it’s $99 today!) Gas prices went from a quarter to a dollar.
CRCT Test Prep page 112
327. What is a tariff?
A. a tax paid by the purchaser when goods are sold
B. a tax placed on goods coming into one country from another
C. a tax placed on goods made by local craftsmen or manufacturers
D. a tax paid when goods are shipped from one state to another in the U.S.
328. What is a quota?
A. a decision to prevent certain goods from being imported
B. a tax placed on imported goods when they enter the country
C. a tax placed on goods when they are purchased in the marketplace
D. a limit to the number or amount of a foreign-produced good that is allowed into the country
329. What is an embargo?
A. a tax placed on goods coming into the country from overseas
B. a limit to the number or amount of a foreign-produced good that is allowed into the country
C. a tax paid by the producer before he can sell his goods in another country
D. a formal halt to trade with a particular country for economic or political reasons
OPEC
GPS: SS7E6c. Explain the primary function of the Organization of Petroleum Exporting Countries
(OPEC)
OPEC
• Created in 1960 by oil producing countries, mostly in SW Asia
• They wanted to work together to regulate the supply and price of oil exported to other countries.
• Supply and Demand: When OPEC countries produce more oil, the price drops. When they produce less
the price goes up.
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330. Why was OPEC created?
A. to regulate the supply and price of oil
B. to design new machinery to get oil out of the ground
C. to help the Palestinians with their problems with Israel
D. to keep countries that are not members from producing any oil
331. What happens to the price of oil when OPEC countries decide to limit production?
A. prices rise
B. price drop
C. prices stay the same
D. oil stops being sold
332. Where are most of the OPEC countries located?
A. Africa
B. South America
C. North America
D. Southwest Asia
Name: ______________________________________ Date: ______________ Period: _____
Currency Exchange
GPS: SS7E6d. Explain why international trade requires a system for exchanging currencies between
nations.
Exchange Rates
• Most countries in SW Asia have their own type of currency.
• In order to pay for goods they trade with each other, they had to set up a system for changing from one
type of currency to another.
• This is called an exchange rate.
• Without a system for exchanging currencies, it would be very difficult to conduct international trade.
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333. Why is it important for nations to have a system to convert from one currency to another?
A. Converting to different currencies makes goods cost less.
B. Banks are not able to handle different kinds of currencies.
C. The dollar is the most valuable currency in the world today.
D. This makes it possible to buy and sell goods between nations with different types of currencies.
Relationship of Capital to GDP in Israel, Saudi Arabia, and Iran
• GPS: SS7E7a. Explain the relationship between investment in human capital and GDP.
• GPS: SS7E7b. Explain the relationship between investment in capital and GDP.
GDP
•
•
•
GDP, or Gross Domestic Product, is determined by taking the total value of all goods and services
produced by a country in a single year.
GDP per capita is the GDP divided by the total population.
You can tell how wealthy a country is by looking at the GDP per capita.
Human Capital
• The knowledge, skills, and experience of people that make it possible for workers to earn a living
producing goods and services.
• Human capital can be increased by investing in education, health care, and job training.
• 3 prime components to improving a nation's human capital:
1. importing skilled labor
2. educating the population
3. providing for its health
(Physical) Capital
• Capital goods (buildings, machines, and technical equipment used in production) are important to
economic growth.
• Producing more goods for sale in a quicker, more efficient way leads to greater profit and economic
growth.
Capital investment increases GDP
• Investing in capital increases a company’s profit and makes for satisfied workers.
• When countries invest in capital, they have higher GDPs.
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334. What is human capital?
A. skills and education workers have
B. taxes collected from a country’s workers
C. money paid to workers for producing goods
D. The amount of goods sold in foreign trade in a year
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335. Why have the Israelis made a big investment in human capital?
A. Their main industry is the oil industry.
B. Investing in human capital takes very little money.
C. They have to bring in workers from other countries.
D. They need well-trained workers because their economy depends on advanced technology.
336. Why would the Saudi oil industry need a large investment in human capital?
A. The technology in the oil industry is very complicated.
B. The Saudis have found it hard to make a profit in the oil industry.
C. Most people working in the Saudi oil industry have little or no real training.
D. They hope to have machines take over most of the jobs now done by workers.
337. One of Iran’s biggest problems with their state-run oil industry is
A. few remaining large oil deposits.
B. lack of a market for their product.
C. inefficiency and poor organization.
D. a labor force that does not want to work.
338. If a country does not invest in its human capital, how can it affect the country’s GDP?
A. Investment in human capital has very little effect on a country’s GDP.
B. Most workers want to keep their jobs and do not care about GDP.
C. GDP is only affected if workers pay for the investment out of their own pockets.
D. GDP may go down because poorly trained workers will not be able to do their jobs as well.
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339. What are capital goods?
A. the workers who make the goods and services
B. the factories and machines used to make goods
C. the money spent to train workers to use new technology
D. the goods and services that are produced for a country’s economy
340. Israel has invested heavily in capital goods in all of the following areas EXCEPT
A. oil
B. defense
C. communication
D. farming and agriculture
Name: ________________________________ Date: _________________ Period: _______
Oil
GPS: SS7E7c. Explain the role of oil in these countries’ economies.
Importance of OIL
• In SW Asia, one of the most important natural resources is oil.
– Over ½ of the world’s known oil supplies are found in SW Asia
• Oil and natural gas are fossil fuels – nonrenewable resources.
• Most industrial nations depend heavily on a steady supply of oil and natural gas.
• We import about ½ of the oil we use (about 18 million barrels PER DAY!)
• SW Asian countries, therefore, already have a market for their oil.
• Many of them have become very rich in the last 50 years as the world demand for oil and gas have
increased.
• Saudi Arabia & Iran are 2 of the world’s largest oil producers.
• Israel has few resources and almost no oil.
Israel
• Israel has a highly developed industrial economy which needs oil and gas to operate.
• World price of oil has huge impact on Israel.
• Israel mines minerals like phosphates and Dead Sea salt to sell, but depends on technology for most of
its GDP.
Saudi Arabia: from Desert Kingdom to Modern Nation in 100 years
• Has very few natural resources
• Has lots of oil
• Has allowed Saudi Arabia to become very influential in the world economy and OPEC
• Oil $$$ has allowed Saudi Arabia to
– Modernize agriculture, roads, schools, airports, communications systems
– Improve ordinary citizens’ lives
Iran
•
•
•
•
•
•
Has rich farmland
Has access to water for irrigation and farming
Has varied economy – OIL is largest contributor to GDP (85% of GDP comes from oil!)
1/3 of people work in agriculture
Political problems have slowed economy
Member of OPEC
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341. Why are oil and gas such valuable natural resources?
A. Large deposits of oil and gas are found in most countries.
B. It is easy to replace oil and gas supplies after they are used.
C. Industrial countries depend on oil and gas as their energy supply.
D. Oil and gas are the only sources of energy used around the world.
342. How much of the oil used by the U.S. has to be imported every day?
A. 33%
B. 50%
C. 75%
D. nearly 100%
343. How has the Saudi government used its national wealth to change the country?
A. All Saudi citizens are given an equal share of the national wealth.
B. The Saudi government has spent very little to improve the lives of ordinary citizens.
C. A majority of the national wealth has been given to religious organizations in the country.
D. The government has paid for improvements in transportation, education, health care, and agriculture.
344. How do Iran and Saudi Arabia benefit from belonging to OPEC?
A. OPEC keeps the price of oil high on the world market.
B. Countries in OPEC are able to share water resources with each other.
C. The organization sets up tariffs to protect SW Asian manufacturing.
D. OPEC makes it possible for SW Asian countries to buy oil at low prices.
Entrepreneurs
GPS: SS7E7d. Describe the role of entrepreneurship.
Entrepreneurs take risks to create new businesses and products.
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345. What is an entrepreneur?
A. people who enjoy saving all their money
B. business people who try not to take risks with their money
C. someone who is always successful in whatever he attempts
D. someone who is willing to take a risk to begin a new business
Name: _______________________________ Date: _______________ Period: _______
Middle Eastern Economies Guided Notes
GPS: SS7E5a. Compare how traditional, command, and market economies answer the economic
questions of (1) what to produce, (2) how to produce, and (3) for whom to produce.
Economics Review
• How many basic types of economic systems are there?
• ___________________________________________________________________________
• Name the economic systems:
• ___________________________________________________________________________
• Which system are most countries in the world?
• ___________________________________________________________________________
Traditional
• Most economic
are based on
and
.
• Found in
areas where people depend on their extended families
– Work is often
farming,
animals, or working in simple
and
trades.
–
money ever changes
in a traditional society.
–
is how people usually
for goods and services.
•
country today has a
economy – but some
of SW Asia still practice it
• (
_____, for example)
CRCT Test Prep page 107
313. In a traditional economy, how are economic decisions made?
A. custom and habit
B. government planners
C. consumers and the market
D. combination of consumers and government planners
Command
• More centralized economy –
make most basic economic _________
– Which
& services should be produced
–
for goods and
paid to workers
– What
workers do
– How & where goods would be __________
• No
can
their own businesses
• Government
the
where goods are made
CRCT Test Prep page 107
314. In a command economy, how are economic decisions made?
A. custom and habit
B. government planners
C. consumers and the market
D. combination of consumers and government planners
Market
• Economic
• Also called
as they please”
•
SW
are made by
, free enterprise, and
countries use a
who decide what to produce and what to buy
(French – means “to allow them to do
system.
CRCT Test Prep page 108
316. In a market economy, how are economic decisions made?
A. farmers
B. custom and habit
C. government planners
D. consumers and the market
317. Who takes on the financial risk in starting a new business in a market economy?
A. consumers
B. government planners
C. individual business people
D. combination of government planners and individual investors
GPS: SS7E5b.: Explain how most countries have a mixed economy located on a continuum between pure
market and pure command.
Mixed
•
•
of
and
SW Asian countries have a
economy characteristics
economy.
CRCT Test Prep page 108
318. Why are most modern economies referred to as mixed?
A. Poverty is always highest in countries with market economies.
B. Government planners do not know how to handle economic problems.
C. Products made by traditional economies have no markets in the modern world.
D. Most countries have aspects of all 3 economic types at work in their economies.
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319. Why do most countries today operate somewhere between a market economy and a command economy?
A. Most consumers want government control of the economy.
B. Government control makes a market economy more profitable.
C. Government control of some aspects of the economy has never been successful in the modern world.
D. Most economies have found they need a mix of free market and some government control to be
successful and protect consumers.
GPS: SS7E5c.: Compare and contrast the economic systems in Israel, Saudi Arabia, and Turkey.
Israel
•
desert country along
Sea
•
farmland and natural
, so…
• Economy is
on advanced _________________
Israel
(1) What to produce?
A large portion of Israel’s
comes from high
manufacturing, financial services, and
.
(2) How to produce?
Israel has a lot of
ownership of business, but is gradually allowing
to ___ companies.
(3) For whom to produce?
Israel’s
sector produces
and services for domestic and international markets based
on the
price system.
Turkey
•
part of the Middle East
• Between
and
– has been a
of trade for
of years
• Has
economic
than
– government
telephone and TV
industries
Turkey
(1) What to produce?
Turkey has an economy with many large
, manufacturing, and
sectors.
(2) How to produce?
Since the late 1980s, Turkey has gradually
from a
directed economy to more
______________ enterprise.
(3) For whom to produce?
_ /__ of Turkey’s production is
. The remainder is consumed by domestic consumers and the
government.
Saudi Arabia
• Large
• Rich
country
reserves allow Saudis to
most of the
they cannot produce themselves.
Saudi Arabia
(1) What to produce?
Saudi Arabia is the world’s
producer of
. The Saudi government continues to
in
______________ production. It is a leader in
, mining, and refining.
(2) How to produce?
• Over
% of the oil industry in the country is
by the
(the
). Most
major industries are operated by the
.
•
/ of Saudi Arabia’s
come from
countries.
• The government has used oil
to
in
development and services
for the
.
3) For whom to produce?
/ of Saudi Arabia’s
is based on
to other countries (This is due to the economy’s
reliance on the
sector).
CRCT Test Prep page 109
320. The economies of Israel, Saudi Arabia, Turkey, and Iran could best be described as
A. Mixed
B. Market
C. Command
D. Traditional
CRCT Test Prep page 110
321. How have the Israelis made up for their lack of natural resources?
A. They have put everyone to work and have no unemployment.
B. They have relied primarily on farming to keep their country strong.
C. They have developed strong technology companies in their economy.
D. Israelis have refused to import oil, saving huge amounts of money each year.
322. Which industry does the government of Saudi Arabia heavily control?
A. oil
B. agriculture
C. technology
D. textile manufacturing
323. How has the Saudi king used the profits from oil to help other areas in his kingdom?
A. Money is distributed directly to all Saudi citizens.
B. The king has ended unemployment in Saudi Arabia.
C. Oil profits have paid for modern technology and services.
D. The king has let the Saudi people decide how to invest oil profits.
Specialization and Trade
GPS: SS7E6a.: Explain how specialization encourages trade between countries.
Specialization
“Do what you do best; trade for the rest!”
Countries
in producing the goods and services they can
they can
them for goods made by
that cannot be produced
Specialization
• In SW Asia,
• They do
Specialization
•
•
have
countries are very
in
; it is hard to
Saudi Arabia
Specializes in production of ___ and
____ and sells these products at great
_________ on the _________ market.
They use the _________ to buy ______
and _____________ that will make their
little bit of farming more efficient.
•
•
•
and natural gas.
enough
most
so
.
.
Israel
Does ___ have ___ wealth
They have become __________ in
_____________ technology – even though
(or because) they have a __________
supply of ________ land.
They _____ the ___________ to earn
money to supplement the food they
produce.
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324. What is “economic specialization”?
A. directly swapping goods from one country to another without having to use money
B. trying to avoid investing in industry and technology because of the expense involved
C. producing all goods and services needed for a country’s growth, so that trade with other countries is
not needed
D. producing goods a country can make most efficiently so they can trade them for goods made by
others that cannot be produced locally.
325. Saudi Arabia specializes in the production of
A. oil and gas.
B. oil and sugar.
C. olives and oranges.
D. beef and chicken.
326. Israel specializes in
A. medical technologies.
B. industrial technologies.
C. scientific technologies.
D. agricultural technologies.
Name: __________________________________ Date: _________________ Period: _______
Trade Barriers
GPS : SS7E6b.: Compare and contrast different types of trade barriers such as tariffs, quotas, and
embargos.
Barriers to Trade
• A
is a
placed on goods that one nation
from another.
• Many nations use tariffs to
their industries from foreign
• Tariffs provide protection by acting to
the
of imported goods.
• Thus, tariffs encourage
firms to
their production, and
forced to
higher
for the protected goods.
Import Quotas
• Quotas set a
on the
of certain goods that can be
• They tend to work
than protective
, which do
always
who are willing to pay a
price for an imported
.
.
are
into a country.
consumers
Embargo
• An embargo is a
order
trade with another country.
• Sometimes a government imposes an embargo to express its
of actions taken by
another government.
• The embargo is intended to
the offending government to
its actions.
The ______ is considering a full trade
against
– because of Iran’s
program.
1973 OPEC Oil Embargo
•
– Arab nations attacked Israel.
• The U.S. supplied Israel with weapons to fight.
• In response,
had an oil
against the U.S. until 1974.
• The result was an oil
.
– Oil went from $3/barrel to $12/barrel (it’s $99 today!) Gas prices went from a quarter to a dollar.
CRCT Test Prep page 112
327. What is a tariff?
A. a tax paid by the purchaser when goods are sold
B. a tax placed on goods coming into one country from another
C. a tax placed on goods made by local craftsmen or manufacturers
D. a tax paid when goods are shipped from one state to another in the U.S.
328. What is a quota?
A. a decision to prevent certain goods from being imported
B. a tax placed on imported goods when they enter the country
C. a tax placed on goods when they are purchased in the marketplace
D. a limit to the number or amount of a foreign-produced good that is allowed into the country
329. What is an embargo?
A. a tax placed on goods coming into the country from overseas
B. a limit to the number or amount of a foreign-produced good that is allowed into the country
C. a tax paid by the producer before he can sell his goods in another country
D. a formal halt to trade with a particular country for economic or political reasons
OPEC
GPS: SS7E6c. Explain the primary function of the Organization of Petroleum Exporting Countries
(OPEC)
OPEC
• Created in
by
producing
• They wanted to work
to
to other countries.
• Supply and Demand: When OPEC countries produce
produce
the price goes
.
, mostly in SW Asia
the
and
oil, the price
CRCT Test Prep page 113
330. Why was OPEC created?
A. to regulate the supply and price of oil
B. to design new machinery to get oil out of the ground
C. to help the Palestinians with their problems with Israel
D. to keep countries that are not members from producing any oil
331. What happens to the price of oil when OPEC countries decide to limit production?
A. prices rise
B. price drop
C. prices stay the same
D. oil stops being sold
332. Where are most of the OPEC countries located?
A. Africa
B. South America
C. North America
D. Southwest Asia
of
exported
. When they
Name: ______________________________________ Date: ______________ Period: _____
Currency Exchange
GPS: SS7E6d. Explain why international trade requires a system for exchanging currencies between
nations.
Exchange Rates
• Most countries in SW Asia have their
type of
.
• In order to pay for goods they trade with each other, they had to set up a
_________________ from one type of
to another.
• This is called an
rate.
• Without a system for exchanging currencies, it would be very
___________.
for
to conduct international
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333. Why is it important for nations to have a system to convert from one currency to another?
A. Converting to different currencies makes goods cost less.
B. Banks are not able to handle different kinds of currencies.
C. The dollar is the most valuable currency in the world today.
D. This makes it possible to buy and sell goods between nations with different types of currencies.
Relationship of Capital to GDP in Israel, Saudi Arabia, and Iran
GPS: SS7E7a. Explain the relationship between investment in human capital and GDP.
GPS: SS7E7b. Explain the relationship between investment in capital and GDP.
GDP
• GDP, or Gross
Product, is determined by taking the total
services produced by a country in a single
.
• GDP per
is the GDP
by the total
• You can tell how
a country is by looking at the
of all
.
per capita.
Human Capital
• The
, skills, and
of people that make it possible for
a living producing
and
.
• Human capital can be
by investing in
, health care, and job
______________.
• 3 prime components to
a nation's human capital:
1. importing
labor
2.
the population
3. providing for its ________________
(Physical) Capital
• Capital
(buildings,
are important to economic
• Producing
goods for sale in a
and economic
.
Capital investment increases GDP
•
in capital
• When
invest in
and
, and technical
to earn
used in production)
.
, more efficient way leads to
a company’s
, they have
profit
and makes for satisfied workers.
GDPs.
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334. What is human capital?
A. skills and education workers have
B. taxes collected from a country’s workers
C. money paid to workers for producing goods
D. The amount of goods sold in foreign trade in a year
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335. Why have the Israelis made a big investment in human capital?
A. Their main industry is the oil industry.
B. Investing in human capital takes very little money.
C. They have to bring in workers from other countries.
D. They need well-trained workers because their economy depends on advanced technology.
336. Why would the Saudi oil industry need a large investment in human capital?
A. The technology in the oil industry is very complicated.
B. The Saudis have found it hard to make a profit in the oil industry.
C. Most people working in the Saudi oil industry have little or no real training.
D. They hope to have machines take over most of the jobs now done by workers.
337. One of Iran’s biggest problems with their state-run oil industry is
A. few remaining large oil deposits.
B. lack of a market for their product.
C. inefficiency and poor organization.
D. a labor force that does not want to work.
338. If a country does not invest in its human capital, how can it affect the country’s GDP?
A. Investment in human capital has very little effect on a country’s GDP.
B. Most workers want to keep their jobs and do not care about GDP.
C. GDP is only affected if workers pay for the investment out of their own pockets.
D. GDP may go down because poorly trained workers will not be able to do their jobs as well.
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339. What are capital goods?
A. the workers who make the goods and services
B. the factories and machines used to make goods
C. the money spent to train workers to use new technology
D. the goods and services that are produced for a country’s economy
340. Israel has invested heavily in capital goods in all of the following areas EXCEPT
A. oil
B. defense
C. communication
D. farming and agriculture
Name: ________________________________ Date: _________________ Period: _______
Oil
GPS: SS7E7c. Explain the role of oil in these countries’ economies.
Importance of OIL
• In SW Asia, one of the
important natural
is
.
– Over
of the world’s known
supplies are found in
Asia
• Oil and natural gas are
fuels –
resources.
• Most
nations depend
on a
supply of
and natural
.
• We
about
of the
we use (about 18
barrels PER
!)
• SW Asian countries, therefore, already have a
for their oil.
• Many of them have become very
in the last
years as the world
for oil
and gas have
.
• Saudi Arabia &
are
of the world’s
oil producers.
• Israel has
resources and almost
oil.
Israel
• Israel has a highly developed
economy which needs
and gas to
• World
of oil has huge
on Israel.
• Israel mines
like phosphates and Dead Sea
to sell, but depends on
for most of its
.
.
___
Saudi Arabia: from Desert Kingdom to Modern Nation in 100 years
• Has very
natural ______________
• Has
of _____
• Has allowed Saudi Arabia to become very
in the world economy and OPEC
• Oil
has allowed Saudi Arabia to
–
agriculture, roads,
, airports, communications systems
– Improve ordinary
lives
Iran
•
•
•
•
•
•
Has
farmland
Has access to
for irrigation and __________________
Has
economy –
is largest contributor to
/ of people work in __________________
Political
have
economy
Member of ______________
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341. Why are oil and gas such valuable natural resources?
A. Large deposits of oil and gas are found in most countries.
B. It is easy to replace oil and gas supplies after they are used.
C. Industrial countries depend on oil and gas as their energy supply.
D. Oil and gas are the only sources of energy used around the world.
342. How much of the oil used by the U.S. has to be imported every day?
A. 33%
B. 50%
C. 75%
D. nearly 100%
(
% of GDP comes from
!)
343. How has the Saudi government used its national wealth to change the country?
A. All Saudi citizens are given an equal share of the national wealth.
B. The Saudi government has spent very little to improve the lives of ordinary citizens.
C. A majority of the national wealth has been given to religious organizations in the country.
D. The government has paid for improvements in transportation, education, health care, and agriculture.
344. How do Iran and Saudi Arabia benefit from belonging to OPEC?
A. OPEC keeps the price of oil high on the world market.
B. Countries in OPEC are able to share water resources with each other.
C. The organization sets up tariffs to protect SW Asian manufacturing.
D. OPEC makes it possible for SW Asian countries to buy oil at low prices.
Entrepreneurs
GPS: SS7E7d. Describe the role of entrepreneurship.
Entrepreneurs take
to create new
and products.
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345. What is an entrepreneur?
A. people who enjoy saving all their money
B. business people who try not to take risks with their money
C. someone who is always successful in whatever he attempts
D. someone who is willing to take a risk to begin a new business