ECONOMIC
UNDERSTANDINGS
UNIT ONE
SOUTHWEST ASIA
SOUTHWEST ASIA
(MIDDLE EAST)
ECONOMIC
UNDERSTANDINGS
ECONOMIC
UNDERSTANDINGS
SS7E5 – THE STUDENT WILL
ANALYZE DIFFERENT
ECONOMIC SYSTEMS.
CRCT PREP 107 -108
EQ – WHAT ARE THE THREE
BASIC ECONOMIC
QUESTIONS?
A. COMPARE HOW
TRADITIONAL, COMMAND,
AND MARKET ECONOMIES
ANSWER THE ECONOMIC
QUESTIONS OF (1) WHAT TO
PRODUCE? (2) HOW TO
PRODUCE? (3) FOR WHOM
TO PRODUCE? CRCT PREP
107 -108
ECONOMICS IS USING
LIMITED RESOURCES TO
SATISFY UNLIMITED NEEDS
AND WANTS.
HOW DO WE DETERMINE
WHAT KIND OF ECONOMIC
SYSTEM IS PRESENT?
• BY HOW THE SYSTEM ANSWERS THE
3 ECONOMC QUESTIONS
• WHAT TO PRODUCE?
• HOW TO PRODUCE?
• FOR WHOM TO PRODUCE?
WHAT ARE THE THREE
ECONOMIC QUESTIONS?
• WHAT IS GOING TO BE PROCUCED?
• HOW IS IT GOING TO BE PRODUCED?
• FOR WHOM IS IT GOING TO BE
PRODUCED?
3 TYPES OF ECONOMIC
SYSTEMS
TRADITIONAL
COMMAND
MARKET
IN TRADITIONAL
ECONOMIC SYSTEMS,
MOST ECONOMIC
DECISIONS ARE BASED
UPON LONGSTANDING
CUSTOMS.
WHICH ECONOMIC SYSTEM
IS BASED ON OLD
TRADITIONS AND CUSTOMS?
• TRADITIONAL
IN COMMAND ECONOMIC
SYSTEMS, MOST
ECONOMIC DECISIONS ARE
MADE BY GOVERNMENT
PLANNERS.
WHICH ECONOMY SYSTEMS
DEPENDS ON GOVERNMENT
PLANNERS TO MAKE
DECISIONS?
• COMMAND
IN MARKET ECONOMIC
SYSTEMS, CONSUMERS,
THROUGH THEIR
PURCHASES, MAKE MOST
ECONOMIC DECISIONS.
WHICH ECONOMIC SYSTEM
DEPENDS ON CONSUMERS
WISHES?
• MARKET
CHARACTERISTICS OF PURE
MARKET ECONOMIES
•
•
•
•
•
•
LITTLE OR NO GOV. CONTROL
FREEDOM OF ENTERPRISE
FREEDOM OF CHOICE
PRIVATE PROPERTY
PROFIT INCENTIVE
COMPETITION
NO COUNTRY HAS A PURE
COMMAND OR PURE
MARKET ECONOMIC
SYSTEM, MOST COUNTRIES
COMBINE ASPECTS OF BOTH
OF THESE PURE ECONOMIC
SYSTEMS.
MIXED ECONOMIES
CONTAIN
CHARACTERISTICS OF
BOTH A COMMAND AND
MARKET ECONOMY. MOST
ECONOMIC SYSTEMS IN
THE WORLD TODAY ARE
MIXED.
TRADITIONAL, COMMAND,
AND MARKET SYSTEM ARE
THE THREE TYPES OF
ECONOMIC SYSTEMS.
WHAT ECONOMIC SYSTEM
COMBINES MARKET AND
COMMAND SYSTEMS?
• MIXED ECONOMIC SYSTEM
WHAT ARE THE THREE BASIC
ECONOMIC SYSTEMS?
• MARKET
• COMMAND
• TRADITIONAL
SS7E5 THE STUDENT WILL
ANALYZE DIFFERENT
ECONOMIC SYSTEMS.
EQ – WHAT IS A MIXED
ECONOMY?
B. EXPLAIN HOW MOST
COUNTRIES HAVE A MIXED
ECONOMY LOCATED ON A
CONTINUUM BETWEEN PURE
MARKET AND PURE
COMMAND.
CRCT PREP – 108 - 109
• How many basic types of economic systems are
there?
• Name the economic systems.
• Which economic system do most textbooks say is
the most common throughout the world?
• How many basic types of economic systems are
there? 3
• Name the economic systems. Traditional,
Command, Market
• Which economic system do most textbooks say is
the most common throughout the world? Mixed.
The GCEE states that mixed is not an economic
system but rather a blending of two different
types of systems.
Economic Systems
Pure
Command
Pure
Market
Israel
68%
Saudi
Arabia
64%
Pure
Command
Iran
45%
Pure
Market
South Africa
64%
Nigeria
55%
Pure
Command
Pure
Market
North Korea
2%
Pure
Command
India
China
54%
53%
Japan
73%
Pure
Market
QUIZ TO HERE
QUIZ IN 3 MINUTES
GET OUT SOME BLANK
PAPER AND NUMBER 1-10
QUESTIIONS 1, 2, 3. WHAT
ARE THE THREE BASIC
ECONOMIC QUESTIONS?
4. HOW DO WE DETERMINE
WHAT KIND OF ECONOMIC
SYSTEM IS PRESENT?
5. WHICH ECONOMIC
SYSTEM IS BASED ON OLD
TRADITIONS AND CUSTOMS?
QUESTIONS 6, 7, 8. WHAT
ARE THE THREE BASIC
ECONOMIC SYSTEMS?
9. IN WHAT KIND OF ECONOMIC
SYSTEM DO GOVERNMENT
PLANNERS ANSWER THE 3
BASC ECONOMIC QUESTIONS?
• A. traditional
• B. COMMAND
• C. MARKET
10. WHAT DO WE CALL AN
ECONOMY THAT HAS
FEATURES OF A MARKET
ECONOMY AND FEATURES
OF A COMMAND ECONOMY?
A. COMPARE AND CONTRAST THE
ECONOMIC SYSTEMS IN ISRAEL,
SAUDI ARABIA, IRAN AND
TURKEY.
CRCT PREP 109
CB – 144-146
EQ – WHAT ARE THE
FEATURES OF THE
ECONOMIC SYSTEMS IN
ISRAEL, SAUDI ARABIA, AND
TURKEY.
ISRAEL
ISRAEL’ ECONOMY
(1) WHAT TO PRODUCE? A
LARGE PROTION OF
ISRAEL’S GDP COMES FROM
HIGH TECH
MANUFACTURING,
FINANCIAL SERVICES, AND
AGRICULTURE.
(2) HOW TO PRODUCE?
ISRAEL HAS SUBSTANTIAL
GOVERNMENT OWNERSHIP
OF BUSINESS, BUT IS
GRADUALLY PRIVATIZTING
COMPANIES.
FOR WHOM TO PRODUCE?
IN ISRAEL THE PRIVATE
SECTOR PRODUCES GOODS
AND SERVICES FOR
DOMESTIC AND
INTERNATIONAL MARKETS
BASED ON THE MARKET
PRICE.
WHERE WOULD YOU PLACE
ISRAEL ON THE
CONTINUUM?
Economic Systems
ISRAEL
Pure
Command
Pure
Market
WHERE WOULD YOU PLACE
ISRAEL ON THE CONTINUUM?
• ISRAEL WOULD FALL SLIGHTLY TO
THE MARKET SIDE OF CENTER OF
THE CONTINUUM
SAUDI ARABIA
WHAT TO PRODUCE?
SAUDI ARABIA’S ECONOMY
WHAT TO PRODUCE?
SAUDI ARABIA IS THE
WORLD’S LEADING
PRODUCER OF OIL. THE
SAUDI GOVERNMENT
CONTINUES TO INVEST IN
PETROCHEMICALS, MINING
AND REFINING.
SAUDI ARABIA
HOW TO PRODUCE?
(2) HOW TO PRODUCE?
OVER 95% OF THE OIL
INDUSTRY IN THE COUNTRY IS
OPERATED BY THE
GOVERNMENT. MOST OTHER
MAJOR INDUSTRIES HAVE
SIGNIFICANT GOVERNMENT
GOVERNMETN INVOLVEMENT.
CONTINUED
SAUDI ARABIA RELIES
HEAVILY ON SPECIALIZED
LABOR FROM OTHER
COUNTRIES. ESTIMATES
ARE THAT A THIRD OF THE
LABOR FORCE FALLS INTO
THIS CATEGORY.
SINCE THE 1980”S SAUDI
GOVERNMENT HAS BEEN
TRYING TO INCREASE
PRIVATE OWNERSHIP OF
BUSINESS AND ENCOURAGE
MORE JOINT VENTURES
WITH PRIVATE FOREIGN
COMPANIES.
SAUDI ARABIA
FOR WHOM TO PRODUCE?
FOR WHOM TO PRODUCE?
ONE THIRD OF SAUDI
ARABIA’S GDP IS BASED ON
EXPORTS TO OTHER
COUNTRIES. (THIS IS DUE TO
THE ECONOMY’S RELIANCE
ON THE OIL SECTOR.)
WHERE WOULD YOU PLACE
SAUDI ARABIA ON THE
CONTINUUM?
Economic Systems
SAUDI ARABIA
Pure
Command
Pure
Market
WHERE WOULD YOU PLACE
SAUDI ARABIA ON A
CONTINUUM?
• SAUDI ARABIA WOULD FALL TO THE
COMMAND SIDE OF THE CENTER OF
THE CONTINUUM
IRAN
WHAT TO PRODUCE?
IRAN
WHAT TO PRODUCE? LIKE
SAUDI ARABIA IRAN HAS
GREAT OIL WEALTH.
IRAN
HOW TO PRODUCE?
IRAN
HOW TO PRODUCE? IRAN
HAS MORE OF A MIXED
ECONOMY THAN SAUDI
ARABIA INSPITE OF THE
FACT THAT THE
GOVERNMENT TRIES TO
KEEP A TIGHT CONTROL
OVER THE ECONOMY.
IRAN
FOR WHOM TO PRODUCE?
IRAN –FOR WHOM TO
PRODUCE? THE COMMAND
SIDE OF IRAN’S ECONOMY IS
NOT VERY EFFICIENT.
DESPITE THE GREAT WEALTH
CREATED BY THE OIL
INDUSTRY NOT MANY
IRANIANS SHARE IN THAT
WEALTH.
WHAT IS IRAN’S MOST
IMPORTANT RESOURCE?
• OIL
IRAN’S ECONOMY HAS
BECOME MORE OF A MIXED
ECONOMY IN SPITE OF
IRAN’S GOVERNMENT
ATTEMPTING TO KEEP MORE
CONTROL OF THE ECONOMY
HOWEVER
Economic Systems
IRAN
Pure
Command
Pure
Market
TURKEY’S ECONOMY
HOW DOES TURKEY ANSWER
THE QUESTION – WHAT TO
PRODUCE?
• TURKEY HAS A DIVERSIFIED
ECONOMY WITH LARGE SERVICE,
MANUFACTURING, AND
AGRICULTURAL SECTORS.
HOW DOES TURKEY DECIDE –
HOW TO PRODUCE?
• SINCE THE LATE 1980’S, TURKEY HAS
GRADUALLY MOVED FROM A
GOVERNMETN DIRECTED ECONOMY
TO MORE PRIVATE ENTERPRISE
HOW DOES TURKEY DECIDE
– FOR WHOM TO PRODUCE?
• ONE FIFTH OF TURKEY’S
PRODUCTION IS EXPORTED. THE
REMAINDER IS CONSUMED BY
DOMESTIC CONSUMERS AND THE
GOVERNMENT
WHERE WOULD YOU PLACE
TURKEY ON THE
CONTINUUM?
Economic Systems
TURKEY
Pure
Command
Pure
Market
WHERE WOULD YOU PLACE
TURKEY ON THE
CONTINUUM?
• TURKEY WOULD FALL BETWEEN
SAUDI ARABIA AND ISRAEL ON THE
MARKET SIDE OF THE CONTINUUM
Iran
45%
Pure
Command
Israel
68%
Saudi
Arabia
64%
Pure
Market
EQ WHAT IS VOLUNTARY
TRADE?
STANDARD SS7E6 – THE
STUDENT WILL EXPLAIN
HOW VOLUNTARY TRADE
BENEFITS BUYERS AND
SELLERS IN SOUTHWEST
ASIA (MIDDLE EAST)
WHAT IS VOLUNTARY
TRADE?
• MAY BE THE MOST BASIC OF
ECONOMIC THEORY
• VT IS TRADE THAT OCCURS BECAUSE
IT BENEFITS THE PARTIES THAT ARE
INVOLVED
EQ – WHAT IS
SPECIALIZATION AND HOW
DOES IT HELP TRADE?
A. EXPLAIN HOW
SPECIALIZATION
ENCOURAGES TRADE
BETWEEN COUNTRIES.
CRCT PREP 111
WHAT IS SPECIALIZATION?
• SPECIALIZATION OCCURS WHEN ONE
NATION CAN PRODUCE A GOOD OR
SERVICE AT A LOWER OPPORTUNITY
COST THAN ANOTHER NATION.
• MIDDLE EAST-CAN PRODUCE OIL
CHEAPER THAN THE U.S.
• THE U.S. CAN PRODUCE COAL CHEAPER
THAN EUROPEAN NATIONS
WHAT ARE THE POTENTIAL
PROBLEMS OF OVERSPECIALIZATION? FOR EXAMPLE
ONE CROP? ONE PRODUCT?
• IF THAT CROP OR PRODUCT FAILS SO
DOES THAT NATIONS ECONOMY
• THERE IS A RISK WHEN AN ECONOMY
LACKS DIVERSIFICATION (MANY
DIFFERENT INDUSTRIES AND CROPS)
WHAT IS GOING TO HAPPEN TO
THE OIL PRODUCING COUNTRIES
OF THE MIDDLE EAST WHEN AN
ALTERNATIVE FORM OF ENERGY IS
DEVELOPED?
• IF THESE COUNTRIES DO NOT
DIVERSIFY THEIR ECONOMIES –
THESE COUNTRIES WILL FAIL
LOOK AT THE LAND USE AND
RESOURCES MAP ON PAGE
77 AND 169. WHY MIGHT
TRADE HAPPEN BETWEEN
SAUDI ARABIA AND SOUTH
AFRICA?
• SAUDI ARABIA MAY WANT GOLD AND
SOUTH AFRICA MAY NEED TO IMPORT
OIL
WHY MIGHT THE UNITED
STATES TRADE FOOD
GROWN IN THE U.S. TO
SAUDI ARABIA?
• THE TRADE MAY BE FOOD FOR OIL
WHAT IS OPPORTUNITY
COST?
• The cost of passing up the next best choice
when making a decision. For example, if an
asset such as capital is used for one purpose,
the opportunity cost is the value of the next
best purpose the asset could have been used
for.
WHY COUNTRIES ENGAGE IN
TRADE?
• EACH COUNTRY SPECIALIZES IN
SOMETHING THE OTHER COUNTRY
NEEDS AND PRODUCES IT AT A
LOWER OPPORTUNITY COST
SS7E7C. THE STUDENT WILL
DESCRIBE FACTORS THAT
INFLUENCE ECONOMIC
GROWTH AND EXAMINE
THEIR PRESENCE OR
ABSENCE IN ISRAEL, SAUDI
ARABIA, AND IRAN.
SS7E7C – EXPLAIN THE
ROLE OF OIL IN THESE
COUNTRIES. (ISRAEL, SAUDI
ARABIA, AND IRAN)
CRCT PREP 117- 119
WHY ARE OIL AND GAS
VALUABLE NATURAL
RESOURCES?
• THESE NATURAL RESOURCES ARE
NECESSARY TO DRIVE THE WORLD’S
INDUSTRIAL NATIONS
• STRATIGIC RESOURCES
WHAT PERCENTAGE OF THE
OIL THAT THE U.S. USES IS
IMPORTED?
• 50%
HOW DOES IT BENEFIT
SAUDI ARABIA AND IRAN TO
BELONG TO OPEC?
• OPEC MONITORS THE PRICE OF OIL
AND KEEPS THAT PRICE HIGH
B. COMPARE AND CONTRAST
DIFFERENT TYPES OF TRADE
BARRIERS SUCH AS TARIFFS,
QUOTAS, AND EMBARGOS.
EQ - LIST AND EXPLAIN
DIFFERERENT TYPES OF TRADE
BARRIERS?
CRCT - 112
WHAT IS A TRADE BARRIER?
• A TRADE BARRIER IS ANY THING THAT
HINDERS TRADE
• TRADE BARRIER CAN BE PHYSICAL,
ECONOMIC, OR POLITICAL. ETC
NAME A PHYSICAL TRADE
BARRIER?
• MOUNTAINS
• DESERTS
• RAINFORESTS ETC.
THESE LANDSCAPES MAKE IT
DIFFICULT TO TRADE
LIST THE ECONOMIC OR
FINANCIAL TRADE
BARRIERS.
• TARIFFS – TAX ON IMPORTS OR EXPORTS
(SUVS)
• QUOTAS – LIMIT ON THE AMOUNT OR
QUANTITY THAT CAN BE IMPORTED OR
EXPORTED (LUMBER)
• EMBARGO – GOVERNMENT ORDER
PROHIBITING TRADE WITH ANOTHER
NATION – (IRAQ, CUBA)
THE UNITED STATES HAS
BANNED IMPORTING
PRODUCTS MADE IN CUBA.
THIS IS AN EXAMPLE OF WHAT
TYPE OF TRADE BARRIER?
• EMBARGO
IRAQ IGNORED THE UNITED
NATIONS REQUEST TO ALLOW
U.N. INSPECTORS TO SEARCH
FOR WMD’S, THE UN STOPPED
TRADE WITH IRAQ EXCEPT FOR
FOOD AND MEDICINE. THIS IS
AN EXAMPLE OF AN …….
• EMBARGO
TO HELP DOMESTIC CAR
MANUFACTURERS, THE
GOVERNMENT PUTS A TAX
ON IMPORTED CARS, WHAT
TYPE OF TRADE BARRIER IS
THIS?
• TARIFF
A GOVERNMENT HAS PUT A
LIMIT ON THE AMOUNT OF
LUMBER THAT CAN BE SOLD
TO FOREIGN NATIONS, WHAT
TYPE OF TRADE BARRIER IS
THIS?
• QUOTA
IN 1973, OPEC NATIONS
DECIDED TO PUNISH THE
UNITED STATES FOR THEIR
SUPPORT OF ISRAEL, THEY
STOPPED SHIPPING OIL TO THE
U.S., THIS IS AN EXAMPLE OF …
• EMBARGO
EQ – WHAT IS THE ROLE OF
OPEC IN REGARD TO THE
WORLD’S OIL SUPPLY?
C. EXPLAIN THE PRIMARY
FUNCTION OF THE
ORGANIZATION OF
PETROLEUM EXPORTING
COUNTRIES (OPEC)
CRCT PREP 113
OPEC CONTROLS THE PRICE
OF OIL BY CONTROLING THE
AMOUNT (SUPPLY) OF OIL
ON THE MARKET.
OPEC IS USING THE
ECONOMIC PRINCIPLES OF
SUPPLY AND DEMAND TO
CONTROL THE PRICE OF OIL.
D. EXPLAIN WHY
INTERNATIONAL TRADE
REQUIRES A SYSTEM FOR
EXCHANGING CURRENCIES
BETWEEN NATIONS.
CRCT 114
CURRENCY EXCHANGES
PROVIDE A PROCEDURE FOR
DETERMINING THE VALUE OF
ONE COUNTRY’S CURRENCY IN
TERMS OF ANOTHER
COUNTRY’S CURRENCY.
WITHOUT CURRENCY
EXCHANGE INTERNATIONAL
TRADE WOULD BE DIFFICULT.
WHY IS IT IMPORTANT FOR
NATIONS TO HAVE A SYSTEM
TO CONVERT FROM ONE
CURRENCY TO ANOTHER?
• THIS PROCESS MAKES IF POSSIBLE TO
BUY AND SELL GOODS BETWEEN
NATIONS WITH DIFFERENT TYPES OF
MONEY.
AFTER THE PERSIAN GULF WAR,
THE UNITED NATIONS IMPOSED
AN EMBARGO ON IRAQ. WHAT
WOULD BE THE REASON AN
EMBARGO WAS USED BY THE
UNITED NATIONS?
• A. TO RESTRICT TRADE WITH IRAQ UNTIL THEY MET UN
REQUIREMENTS
• B. TO INCREASE THE COST OF IRAQI PRODUCTS TO
HELP IRAQ’S ECONOMY
• C. TO PROTECT IRAQ’S DOMESTIC INDUSTRY SO IT
WOULD GROW AFTER THE WAR
• D. TO CONTROL THE IRAQI ECONOMY AFTER THE WAR
OIL IS THE MAJOR EXPORT OF
SAUDI ARABIA TO MANY
DIFFERENT COUNTRIES. SAUDI
ARABIA’S INTERNATIONAL
TRADE IN OIL IS MADE MUCH
EASIER BY
• A. USE IF A WORLD WIDE CURRENCY
• B. A SYSTEM TO EXCHANGE CURRENCY
BETWEEN COUNTRIES
• C. TRADING ONLY WITH COUNTRIES THAT HAVE
THE SAME CURRENCY
• D. TRADE OF OIL FOR OTHER NEEDED GOODS
SO CURRENCY IS NOT NEEDED.
WHAT IS A TRADE
BARRIERS?
• A TRADE BARRIERS IS ANYTHING
THAT RESTRICTS TRADE. TRADE
BARRIERS CAN BE PHYSICAL,
ECONOMIC, OR POLITICAL.
WHAT IS A PHYSICAL TRADE
BARRIER.
• A PHYSICAL TRADE BARRIER IS A
TYPE OF LANDFORM THAT MAKES
TRADE DIFFICULT.
• MOUNTAINS, DESERTS,
RAINFORESTS, ETC.
BESIDES THE PHYSICAL
TRADE BARRIERS, WHAT
ARE THE DIFFERENT TYPES
OF TRADE BARRIERS?
• TARIFFS
• QUOTAS
• EMBARGOS
WHAT IS A TARIFF?
• A TARIFF IS A TAX ON A GOOD BEING
IMPORTED OR EXPORTED
• A PROTECTIVE TARIFF IS A TAX ON A
GOOD THAT IS BEING IMPORTED
BECAUSE THE GOVERNMENT WANTS
TO PROTECT A DOMESTIC INDUSTRY
FROM COMPETITION
• EX. TAX ON IMPORTED SUV’S
WHAT IS A QUOTA?
• A QUOTA IS A LIMIT ON THE AMOUNT
OR QUANTITY OF GOOD THAT CAN BE
IMPORTED OR EXPORTED.
THE UNITED STATES HAS
QUOTA APPLIED TO
EXPORTED LUMBER. IF
TRADE STARTS UP WITH
CUBA, THERE WILL
PROBABLY BE A QUOTA
PLACED ON IMPORTED
SUGAR.
WHAT IS AN EMBARGO?
• AN EMBARGO OCCURS WHEN A
ORGANIZATION PROHIBITS TRADE
WITH A COUNTRY.
• A government prohibition against the
shipment of certain products to a
particular country for economic or political
reasons.
AFTER THE PERSIAN GULF,
AGAINST WHAT COUNTRY
DID THE U.N. PLACE AN
EMBARGO?
• A. KUWAIT
• B. IRAN
• C. IRAQ
C. EXPLAIN THE PRIMARY
FUNCTION OF THE
ORGANIZATION OF
PETROLEUM EXPORTING
COUNTRIES (OPEC).
EQ – WHAT IS THE ROLE OF
OPEC?
WHAT DOES O-P-E-C STAND
FOR?
• ORGANIZATION OF PETROLEUM
EXPORTING COUNTRIES
WHAT ROLE DOES OPEC
PLAY IN THE OIL MARKET?
• OPEC CONTROLS THE PRICE OF OIL
BY CONTROLLING THE SUPPLY OF
OIL ON THE MARKET
• SUPPLY AND DEMAND
QUIZ
GET PAPER OUT
PUT YOUR NAME AT THE TOP
ECONOMICS QUIZ
NAME ________________
1. ISRAEL PRODUCES ALL OF
THE FOLLOWING EXCEPT?
•
•
•
•
A. HIGH TECH MANUFACTURING
B. FINANCIAL SERVICES
C. AGRICULTURAL PRODUCTS
D. PETROLEUM PRODUCTS
2. WHO OWNS THE
BUSINESSES IN ISRAEL?
• A. ISRAEL HAS SUBSTANTIAL
GOVERNMENT OWNERSHIP BUT IS
GRADUALLY PRIVATIZING
• B. ALL BUSINESSES ARE OWNED
PRIVATELY
3. SAUDI ARABIA IS THE
WORLD’S LEADING
PRODUCER OF _____
4. WHAT PERCENTAGE OF
THE OIL INDUSTRY IS
OPERATED BY THE SAUDI
GOVERNMENT?
•
•
•
•
A. 40%
B. 50%
C. 75%
D. 95%
5. TURKEY’S ECONOMY IS
MOVING FROM A GOVERNMENT
DIRECTED ECONOMY TO MORE
PRIVATE ENTERPRISES, THIS
MAKES TURKEY’S ECONOMY A
… ECONOMY.
• A. COMMAND
• B. MIXED
• C MARKET
6. THIS OCCURS WHEN A
NATION CAN PRODUCE A GOOD
OR SERVICE AT A LOWER
OPPORTUNITY COST THAN
ANOTHER NATION.
A. SPECIALIZATION
TRADE DEFICIT
C. VOLUNTARY TRADE
B.
7. WHEN A COUNTRY HAS
MANY DIFFERENT
INDUSTRIES, THAT COUNTRY
IS SAID TO BE
A. SPECIALIZED
B. DIVERSIFIED
C. INCORPORATED
8. WHEN A COUNTRY LIMITS
THE AMOUNT OF A GOOD
THAT IS IMPORTED OR
EXPORTED IT IS APPLYING A
A. EMBARGO
B. QUOTA
C. TARIFF
9. WHEN A COUNTRY APPLY A
TAX TO AN IMPORT OR
EXPORT THIS IS CALLED A ..
• A. TRADE EMBARGO
• B. QUOTA
• C. TARIFF
10. FOR THE PAST 60+ YEARS,
THE UNITED STATES
GOVERNMENT HAS PROHIBITED
TRADE WITH CUBA, THIS IS AN
EXAMPLE OF A/AN ….
• A. TARIFF
• B. EMBARGO
• C. QUOTA
11. AFTER THE PERSIAN GULF
WAR THE U.N. PROHIBITED
TRADE WITH IRAQ. WHY?
• A. UNTIL IRAQ MET UN
REQUIREMENTS
• B. TO INCREASE THE COST OF IRAQ’S
PRODUCTS
• C. TO PROTECT IRAQ’S INDUSTRIES
• D. TO CONTROL IRAQ’S ECONOMY
AFTER THE WAR
12. HOW DOES OPEC CONTROL
THE PRICE OF OIL?
• A. BY CONTROLLING DEMAND
• B. BY CONTROLLING OIL TANKERS
• C. BY CONTROLLING THE SUPPLY OF
OIL ON THE MARKET
13. ISRAEL SPECIALIZES IN
•
•
•
•
A. MEDICAL TECHNOLOGIES
B. INDUSTRIAL TECHNOLOGIES
C. SCIENTIFIC TECHNOLOGIES
D. AGRICULTURAL TECHNOLOGIES
14. WHAT HAPPENS TO THE
PRICE OF GASOLINE WHEN
OPEC DECIDE TO LIMIT (CUT)
PRODUCTION
•
•
•
•
A. PRICES RISE
B. PRICES DROP
C. PRICES STAY THE SAME
D. OIL STOPS BEING SOLD
15. WHY IS CURRENCY
EXCHANGE IMPORTANT?
• A. CONVERTING TO DIFFERENT
CURRENCIES MAKES GOODS COST
LESS
• B. BANKS ARE NOT ABLE TO HANDLE
DIFFERENT KINDS OF CURRENCIES
• C. THIS MAKES IT POSSIBLE TO BUY AND
SELL GOODS BETWEEN NATIONS WITH
DIFFERENT TYPES OF MONEY
CURRENCY EXCHANGES
PROVIDE A PROCEDURE FOR
DETERMINING THE VALUE OF
ONE COUNTRY’S CURRENCY IN
TERMS OF ANOTHER
COUNTRY’S CURRENCY.
WITHOUT CURRENCY
EXCHANGE INTERNATIONAL
TRADE WOULD BE DIFFICULT.
WHY IS IT IMPORTANT FOR
NATIONS TO HAVE A SYSTEM
TO CONVERT FROM ONE
CURRENCY TO ANOTHER?
• THIS PROCESS MAKES IF POSSIBLE TO
BUY AND SELL GOODS BETWEEN
NATIONS WITH DIFFERENT TYPES OF
MONEY.
AFTER THE PERSIAN GULF WAR,
THE UNITED NATIONS IMPOSED
AN EMBARGO ON IRAQ. WHAT
WOULD BE THE REASON AN
EMBARGO WAS USED BY THE
UNITED NATIONS?
• A. TO RESTRICT TRADE WITH IRAQ UNTIL THEY MET UN
REQUIREMENTS
• B. TO INCREASE THE COST OF IRAQI PRODUCTS TO
HELP IRAQ’S ECONOMY
• C. TO PROTECT IRAQ’S DOMESTIC INDUSTRY SO IT
WOULD GROW AFTER THE WAR
• D. TO CONTROL THE IRAQI ECONOMY AFTER THE WAR
OIL IS THE MAJOR EXPORT OF
SAUDI ARABIA TO MANY
DIFFERENT COUNTRIES. SAUDI
ARABIA’S INTERNATIONAL
TRADE IN OIL IS MADE MUCH
EASIER BY
• A. USE IF A WORLD WIDE CURRENCY
• B. A SYSTEM TO EXCHANGE CURRENCY
BETWEEN COUNTRIES
• C. TRADING ONLY WITH COUNTRIES THAT HAVE
THE SAME CURRENCY
• D. TRADE OF OIL FOR OTHER NEEDED GOODS
SO CURRENCY IS NOT NEEDED.
NEW QUIZ STARTS HERE
SS7E7 THE STUDENT WILL
DESCRIBE FACTORS THAT
INFLUENCE ECONOMIC
GROWTH AND EXAMINE
THEIR PRESENCE OR
ABSENCE IN ISRAEL, SAUDI
ARABIA, AND IRAN.
CRCT – 109-110
SS7E7B. EXPLAIN THE
RELATIONSHIP BETWEEN
INVESTMENT IN CAPITAL
(FACTORIES, MACHINERY,
AND TECHNOLOGY AND
GROSS DOMESTIC PRODUCT
GDP.
CRCT PREP – 116-117
FACTORIES, MACHINERY,
COMPUTERS ETC. ARE
EXAMPLES OF ….
• CAPITAL GOODS
SS7E7A – EXPLAIN THE
RELATIONSHIP BETWEEN
INVESTMENT IN HUMAN
CAPITAL (EDUCATION AND
TRAINING) AND GROSS
DOMESTIC PRODUCT (GDP)
CRCT PREP – 115-116
THE SKILLS AND EDUCATION
THAT WORKERS HAVE IS
CALLED ……
• HUMAN CAPITAL
WHAT IS DETERMINED WHEN
WE CALCULATE THE TOTAL
VALUE OF GOODS AND
SERVICES PRODUCED BY A
COUNTRY IN A SINGLE
YEAR?
• GDP – GROSS DOMESTIC PRODUCT
WHEN WE CALCULATE THE TOTAL
AMOUNT OF GOODS AND
SERVICES PRODUCED IN A
COUNTRY AND DIVIDE THAT
NUMBER BY THE TOTAL
POPULATION, WHAT DOES THAT
NUMBER REPRESENT?
• GDP PER CAPITA
ISRAEL
LIT. RATE 96.9%
REAL ECONOMIC GROWTH RATE IN
2007 WAS 4.8%
REAL ECONOMIC GROWTH RATE IS
THE PERCENT THE GDP
INCREASED OVER THE PREVIOUS
YEAR.
ISRAEL’S LIT. RATE UP 85% FROM
1980
SAUDI ARABIA
LITERACY RATE IS 78.8%
REAL ECONOMIC GROWTH
RATE IN 2007 WAS 6.1%
SAUDI ARABIA’S LIT. RATE IS
UP 48.5% FROM 1980
IRAN LIT. RATE 79%
REAL ECONOMIC GROWTH
RATE 2007 WAS 6.2%
IRAN’S LITERACY RATE IS UP
FROM 50% IN 1980
SS7E7B. EXPLAIN THE
RELATIONSHIP BETWEEN
INVESTMENT IN CAPITAL
(FACTORIES, MACHINERY,
AND TECHNOLOGY) AND
GDP.
CRCT 116-117
INVESTMENT IN CAPITAL
GOODS INCREASES
PRODUCTION AND OPENS
EXPORTATION OF GOODS.
INVESTMENT IN CAPITAL
GOODS TENDS TO INCREASE
GDP.
WHAT IS GDP?
• GROSS DOMESTIC PRODUCT
• GDP is the market value of all final goods
and services made within the borders of a
nation in a year.
WHAT IS REAL GROWTH RATE
GDP?
• economic growth rate - The pace at
which economic growth increases during a
given interval.
ISRAEL
CAPITAL INVESTMENT-18%
OF GDP
REAL GROWTH RATE-4.8%
SAUDI ARABIA
CAPITAL INVESTMENT-19.5%
OF GDP
REAL GROWTH RATE 6.1%
IRAN
CAPITAL INVESTMENT –
27.7% GDP
REAL GRWOTH RATE 6.2%
C. EXPLAIN THE ROLE OF OIL
IN THESE COUNTRIES.
CRCT 117-119
THE IMPACT OF THE
NATURAL RESOURCES OF
OIL INCREASE THE GDP OF A
COUNTRY THAT POSSESSES
THAT OIL.
ISRAEL
GDP-$170 BILLION (2008)
OIL – NO SIGNIFICANT
RESERVES
SAUDI ARABIA
GDP - $527 BILLION 2008
OIL – LARGEST PRODUCER AND
EXPORTER OF OIL IN THE
WORLD. 90% OF GOVERNMENT
REVENUES COME FROM THE
OIL INDUSTRY.
IRAN
GDP - $852.6 BILLION 2008
OIL THE ECONOMY RELIES
PRIMARILY ON THE OIL
INDUSTRY. 80% OF EXPORTS
ARE PETROLEUM AND
PETROLEUM PRODUCTS.
SS7E7D. DESCRIBE THE ROLE
OF AN ENTREPRENEUR.
CRCT PREP - 119
EQ – WHAT IS THE IMPORTANCE
OF AN ENTREPRENEUR?
WHAT IS AN
ENTREPRENEUR?
• An entrepreneur is a person who has
possession of an enterprise, or venture,
and assumes significant accountability for
the inherent risks and the outcome.
A PERSON THAT IS WILLING
TO RISK HIS MONEY, TIME,
EFFORT ETC. TO START A
BUSINESS IS CALLED AN …
• ENTREPRENEUR – RISK TAKER
• ENTREPRENEURSHIP IS ONE OF THE
FOUR FACTORS OF PRODUCTION THE
OTHER THREE FACTORS ARE LAND,
LABOR, AND CAPITAL
ENTREPRENEURS ARE VITAL
TO MAINTAINING AND
DEVELOPING ECONOMIES.
(INNOVATIONS, IDEAS, ETC.)
ISRAEL AND ENTREPRENEURSHIP –
ISRAEL IS MODERATELY OPEN TO
ENTRPRENEURSHIP. IT IS EASY TO
START A BUSINESS, BUT IT TAKES
LONGER THAN THE WORLD
AVERAGE. IN ISRAEL, PRIVATE
PROPERTY IS WELL PROTECTED
BY LAW. FOREIGN INVESTMENT IS
ENCOURAGED BUT LIMITED IN
SOME CIRCUMSTANCES.
SAUDI ARABIA HAS BECOME
INCREASINGLY OPEN TO
ENTREPRENEURSHIP. STARTING A
BUSINESS IS MADE EASY BY THE
GOVERNMENT, COMPARED TO THE
WORLD AVERAGE. PRIVATE
PROPERTY IS PROTECTED VERY
WELL. FOREIGN INVESTMENT IS
ENCOURAGED ALTHOUGH SOME
MUST HAVE SAUDI PARTNERS.
IRAN IS NOT VERY OPEN TO
ENTREPRENEURSHIP. IRANS
ECONOMY IS CENTRALIZED AND
REGULATIONS MAKE IT DIFFICULT
FOR INDIVIDUALS TO OPEN
BUSINESSES. THERE IS LITTLE
PROTECTION OF PRIVATE
PROPERTY RIGHTS, AND THE
GOVERNMENT ALLOWS VERY
LITTLE FOREIGN INVESTMENT.
SAUDI ARABIA’S LITERACY RATE
INCREASED FROM APPROX. 48% in
1980 TO OVER 78% IN 2009. WHY IS
THIS IMPORTANT FOR THE SAUDI
ARABIAN ECONOMY?
• A. IT HAS HELPED INCREASE FOREIGN TRADE
• B. IT CAUSED A DECREASE IN FOREIGN DEBT
• C. IT HELPED TO INCREASE THE COUTRY’S
GDP
• D. IT RESULTED IN FEWER JOBS FOR SAUDI
CITIZENS
•
•
•
•
IN IRAN THE ECON. IS HIGHLY
CENTRALIZED AND REGULATIIONS
HINDER PRIVATE INDIVIDUALS
FROM OPERATING BUSINESSES.
SAUDI ARABIA HAS MADE OWNING
A BUSINESS EASY. WHAT IS THE
IMPACT OF ENTREPRENEURSHIP?
A. ENTRE. ARE NOT AFFECTED BY GOV. REGULATIONS
B. IT LIMITS THE ROLE OF ENTRE. IN BOTH COUNTRIES
C. ENTRE. WILL HELP IN SAUDI ARABIA BUT NOT IN IRAN
D. BOTH IRAN AND SAUDI ARABIA WILL BENEFIT FROM
THE EFFORTS OF ENTRE.