Economics Terms Preview

Economics Terms Preview

Standard of Living

The level of wants and needs that are met by a society.

Literacy Rate

The percentage of adults in a country that can read and write in their first language. High literacy rates usually result in high standards of living for a country.

Human Capital

Education and training. This allows people to make more complex products or make their current products more efficiently. Both of these raise the standard of living and the GDP in a country.

Capital Goods

Tools and machinery that are used to make consumer goods and services. These also allow people to make more complex products or make current products more efficiently. Both of these result in a higher standard of living and GDP in a country.

Multiple Choice

Which of these would best explain why a high literacy rate would lead to a high standard of living in a country?

• People that read a lot are less likely to have jobs so they will be able to buy the things they need.

• Reading is important for Human Capital so societies can make more complex goods or make goods more efficiently.

• People that can't read are more likely to have a high paying job so they can buy the things they want.

GDP (Gross Domestic Product)

The total value of all the goods and services produced in a country in a year.

Per Capita GDP

Total GDP divided by the number of people living in the country. It shows production per person and is a better measure of the wealth of a country.

Traditional Economy

Economic system where what to produce, how to produce it, and who to produce it for is based on traditions and customs. No countries use this for a national economy.

Market Economy

Economic system where what to produce, how to produce it, and who to produce it for is decided by producers and consumers. The government does not interfere in a pure market economy. There are no pure market economies in the world today.

Command Economy

Economic system where what to produce, how to produce it, and who to produce it for is decided by the government. A central government plans all economic decisions in a pure command economy. There are no pure command economies in the world today.

Mixed Economy

Economic system where what to produce, how to produce it, and who to produce it for is partially decided by producers and consumers and partially decided by the government. All national economies today are mixed and lean either more to the command or more to the market side of an economic continuum line.

Multiple Choice

If a country mostly allows producers and consumers to make economic decisions but the government has some regulations to limit things like dangerous products, what type of economy does the country have?

• mixed leaning traditional

• mixed leaning market

• mixed leaning command

• mixed leaning autocratic

Multiple Choice

Which of these would be a disadvantage of a traditional economy?

• Too many goods and services would be available for the people.

• Standard of living would be very high.

• People might want things that can't be made in the economy.

• People would know what their job would be at a young age.