European Economic Growth Factors
European Economic Growth Factors Essential Question: What factors influence a country's economic growth?
Economic Check Point Economics is the study of how a market makes, distributes, and consumes products and services. What are the 3 basic economic questions: What to produce? How to produce? For whom to produce?
Gross Domestic Product (GDP) The total value of all the goods and services produced in a country in a year. Use to tell how rich/poor a country is. Often an indicator of Standard of Living (just like the literacy rate) it s like a big (imaginary) calculator that keeps track of all the money spent in a country in a year.
Top 5 highest GDPs on Earth YEAR 2010 1 European Union $14,820,000,000,000 2 United States $14,660,000,000,000 3 China $10,090,000,000,000 4 Japan $4,310,000,000,000 5 India $4,060,000,000,000
Bottom 5 lowest GDPs on Earth YEAR 2010 223 Tuvalu $36,000,000 224 Montserrat $29,000,000 225 Tristan da Cunha $18,000,000 226 Niue $10,010,000 227 Tokelau $1,500,000
GDP per capita When you take the GDP and divide it by the population of that country. Is a more accurate picture of how much $$ a country has compared to the GDP
Top 5 highest GDPs per capita YEAR 2010 1 Qatar $179,000 2 Liechtenstein $141,100 3 Luxembourg $82,600 4 Bermuda $69,900 5 Singapore $62,100 *USA is # 47 with $47,200
Bottom 5 lowest GDPs per capita YEAR 2010 223 Eritrea $600 224 Zimbabwe $500 225 Liberia $500 226 Democratic Republic of the Congo $300 227 Burundi $300 *All in Africa
Private vs. Public Businesses Public means it is owned by the government Private means it is owned by citizens
4 Factors of production Natural resources Human Capital Capital Resources Natural Resources
Entrepreneur/Entrepreneurship Entrepreneurs are individuals who take risks in an economy by starting new businesses. Why do you think it is more difficult for entrepreneurs to act in a command economy?
Human Capital/Resource The skills that humans have to build things or perform services. Examples: Education Training Health of Workers
Capital Good/Resource The things needed to make other goods Examples: Machines Ice machine Coin press Factories A car manufacturing plant Technology Computers Software
Natural Resources Resources that come from nature Mineral Lumber Food Water
International Trade The sale of goods or services across country borders Trade between different countries
Trade Barrier Barrier=wall Something that prevents trade Examples: Tariff Quota Embargo Geography (geography that prevents easy trade, like mountains, oceans, etc.)
Embargoes An embargo is when one country completely refuses to trade with another country. EX: We used to have an embargo with the Soviet Union EX: We now have an embargo with Cuba This is usually done between two countries that don t like each other. How do you think this affects world trade?
Quota The amount of something that is allowed or admitted Examples: A restriction on the quantity (number) of a good that can be imported during a specific time period would be called an import quota. If the United States government only allows 50 tons of corn to be imported into the US each year, this would also be called an import quota. If your teacher has given you 20 minutes to work on an assignment, your time quota is 20 minutes.
More QUOTA examples Money Quota: Your parents give you $20 a week to spend. Once you spend all $20, you have met your money quota. You will not receive any more money until next week. Paper Quota: Your job only allows you to use 1,000 sheets of paper per year. If you use all 1,000 sheets, then you have met your paper quota. You will not receive any more paper until next year.
Tariffs Tariffs are taxes charged for goods that leave or enter a country In order to get a product from another country, you have to pay extra for it. Just like sales tax Think of how many goods the United States imports. How do you think tariffs might affect the economy? How do you think this affects world trade?
Voluntary Trade Same as international trade, but the countries both benefit from trade and they voluntarily decide to trade with one another
Russia s Economy Russia has had to shift from a command economy following the fall of their communist economy. They have moved towards a mixed market economy. During this shift Russia has struggled with high unemployment, a fall in value of the Russian currency (the Ruble), and inflation being high. Russia has oil and sells it to other countries. Russia has a skilled labor force, and it s gross domestic product* (or GDP) has been on the rise for the past few years, this gives hope that their economy will be strong soon. *GDP is the value of the goods and services produced in a nation within a year.
Germany s Economy The reunification of East and West Germany has caused economic difficulty in Germany. Germany had to combine two very different economic systems. East Germany had a command economy, while West Germany had a mixed economy. They have combined a free market, some governmental control, and social welfare (to help the poor) to create a new mixed economy called a social market economy. Germany s combined industrialized economy has become one of the strongest in Europe. Germany has a high literacy rate that reflects the high quality education required of Germany s children, this investment in it s people helps the economy.
United Kingdom s Economy The UK has a mixed market economy The government controls some economic activity while private companies control others. The UK has a welfare system, socialized medicine, and the government is involved in overseeing fair business practices, banking, and the supply of money. Service Industries (banking, insurance, etc.) make up the largest part of their GDP. The discovery of oil in the North Sea has helped the UK be less dependent on other nations. The people of the UK have a high standard of living, and the literacy rate is among the highest in Europe.
Currencies of Europe Something you exchange for goods or services The money in circulation in any country
Currencies of Europe France, Italy, and Greece use the Euro. The Euro has pictures representing each of it s member nations, much like our quarters for each state, here in the U.S.A. Below are Euro coins. All coins have the same front design These are some of the back designs for the 1euro piece representing different EU nations. France Italy Germany
Currencies of Europe SS6E6d Here are pictures of the Euro paper currency. 5 euro 10 euro 20 euro 50 euro 100 euro 200 euro 500 euro
Original Ruble Symbol Currencies of Europe Unofficial Ruble Symbol Russia s currency is the Ruble. 1 Ruble 5 Rubles 50 Rubles
Currencies of Europe Zloty Symbol Poland s currency is the zloty. 10 zloty 20 zloty 100 zloty 200 zloty 5 zloty
Specialization In economics, the term specialization refers to people or companies focusing on providing a single good or service, instead of a range of different goods.
Specialization Encourages Trade Comparative Advantage If a company is able to produce one good at a faster or cheaper rate then other companies, then they have a comparative advantage and producing another type of good would lower their productivity. Trade By producing a single good or service, companies can then trade with others who have their own unique specialization. This creates more goods overall and benefits everyone.
Specialization Encourages Trade Labor By training workers to complete only one task, they can perfect it and increase the production efficiency. Productivity Being able to create more goods at a lower cost increases the overall productivity of a company. This, in turn, benefits the economy as a whole.
Examples OPEC- organization to influence price of oil Saudi Arabia, Iran, Iraq, Venezuela, Kuwait, Nigeria, Indonesia Cuba = tobacco and sugar cane Brazil = coffee, oranges, soybeans, etc. Venezuela = oil & natural gas Mexico = oil & silver
Summary Each person or country makes money from something they are really good at. They specialize in what they do well which creates a division of labor. Dividing the work into different parts is more efficient and cost-effective. Less equipment is needed, time is saved, and generally better products are produced.