Government and Economy of Europe

traditional economy

An economy in which production is based on customs and traditions and economic roles are typically passed down from one generation to the next. (People have to do what their parents and grandparents did)

European Union

An international organization of European countries formed after World War II to reduce trade barriers and increase cooperation among its members.

Which of the following explanations would reflect a country with a mixed economy (i.e., between a pure market and pure command)? A. Prices and wages are solely regulated by a country's government. B. A combination of privately-owned industry and government control. C. A country's distribution of resources is based on inheritance D. Prices and wages are determined by the laws of supply and demand rather than being regulated by a country's government.

B. A combination of privately-owned industry and government control.

What do the economic systems of the United Kingdom, Germany, and Russia have in common? A. All are examples of pure market economies. B. All are examples of mixed economies that are mostly market economies with some elements of command economies. C. All are examples of mixed economies that are mostly command economies with some elements of market economies. D. All are examples of pure command economies.

B. All are examples of mixed economies that are mostly market economies with some elements of command economies.

A country's parliament votes to increase tariffs upon goods from another country. This is an example of A. a monarchy encouraging free trade. B. a representative democracy restricting trade. C. a socialist congress preventing free enterprise. D. a communist government allowing freedom of speech.

B. a representative democracy restricting trade.

In a traditional economic system people usually exchange goods or services rather than use money. Which of the following is an example of this exchange process? A. charging goods on a credit card B. bartering with a seller C. paying for services by check D. using currency to pay

B. bartering with a seller

Which term best describes an economic system in which the people—not the government—own land, factories, and businesses? A. communism B. market C. command D. traditional

B. market

A sixth−grade class decides to open a popcorn stand. The stand and the popcorn popper are examples of which factor of production? A. natural resources B. human resources C. capital resources D. entrepreneurship

C. capital resources

In which economic system are the production and distribution of goods owned by private individuals or corporations? A. traditional B. feudalism C. market D. command

C. market

You are a small business owner and you sell computer gaming consoles. You have chosen to sell this product to teenagers and young adults. You decided to sell consoles because they are easy to build, are popular and make a high profit. You decide o n the prices for your consoles based ONLY on the following factors: How many consoles you have in your warehouse, and How many consoles you are sell each week Which type of economy do you have? A. subsistence B. command C. market D. closed

C. market

Where are Russia, German and UK located on the economic continuum?

C_______________R___G_____UK_______M

When a country has a market economy, which of these statements correctly defines this system? A. Workers are guaranteed a pay raise every year. B. The government controls most of the businesses in the country. C. Basic goods in the country are provided to all people without charge. D. Companies produce goods of their choice and consumers decide whether to buy the goods.

D. Companies produce goods of their choice and consumers decide whether to buy the goods.

Which trade barrier discourages trade by placing a tax on foreign goods? A. Embargo B. Quota C. Subsidy D. Tariff

D. Tariff

why does international trade require a system for exchanging currencies between nations?

Many countries have their own type of currency. In order for them to pay for goods as they trade with each other, they had to establish a system of exchanging from one type of currency to another. This system is known as an exchange rate. They also have to be able to exchange their currencies with those used by other countries around the world. The currency of the United States is based on the dollar. In most of Western Europe, currency is called the Euro. In Southwest Asia, there are many different types of currency. In order for them to trade with each other, they have to be able to figure out what goods cost in each currency. without a system for exchanging currencies it would be very difficult to conduct international trade

type of economic system all countries in Europe have

Market economy

four factors of production

natural resources (land), human resources (labor), capital resources (buildings and machinery), and entrepreneurship (organization)

why would a country impose a quota?

so people will focus on producing and buying domestic products

entrepreneurship

the process of bringing together the three factors of production - natural resources, labor and capital - the person who does this is an entrepreneur; The ability to combine the factors of land, labor, and capital to create factory production

role of natural resources in a country's economy

they are very important because they are used to make things - the more natural resources more potential for growth

why would a country impose a tariff?

to get money

Where does Russia fall on the economic continuum?

(1) What to produce? government is still largely involved with many aspects of the economy and must approve any investment larger than 50 million rubles. (2) How to produce? Making large scale production changes in Russia is difficult due to the immense bureaucracy. There is a movement towards modernizing factories and agricultural equipment, but it is slow. (3) For whom to produce? Perhaps surprisingly, Russia has fairly low to moderate tax rates. Increasingly Russia is trying to allow for market interaction, but high tariffs and minimal protection of private property make this difficult. Place on the continuum: Russia is practically in the dead center of the continuum.

Where does UK fall on the economic continuum?

(1) What to produce? largely a service based economy but also has an extremely efficient agricultural sector. (2) How to produce? Industries have much freedom in the UK. There have been recent moves to partially-nationalize certain industries like banking. (3) For whom to produce? The private sector produces goods and services for domestic and international markets based on the market price system. Place on the continuum: The UK would be far to the market side of center on the continuum.

Where does Germany fall on the economic continuum?

1) What to produce? primarily an export-based economy focusing on manufacturing and commodities. (2) How to produce? German businesses are largely privately owned and independent. (3) For whom to produce? Germany survives largely based on their exports, which are determined by global markets. Place on the continuum: Germany would fall to the market side of the continuum, but fairly far away from the United Kingdom (back towards command).

market economy

A market economy is an economy in which decisions regarding investment, production, and distribution are based on supply and demand, and prices of goods and services are determined in a free price system. Businesses have control.

command economy

An economic system in which the government makes all economic decisions. Government makes decisions on how things work and own everything.

Which of following best describes a market economy? A. A person can start any legal business and charge any price. B. The government provides food and housing to all workers. C. The government provides services, such as telephones and television. D. National businesses, such as airlines, are owned by the government.

A. A person can start any legal business and charge any price.

The economic system of communist countries is most closely related to which of the following? A. command B. market C. traditional D. supply and demand

A. command

A market economy is very different from a command economy. Which of the following is found in a market economy? A. competition B. guaranteed yearly pay raises C. government control of industry D. government control of agriculture

A. competition

The United Kingdom Customs Service has found toxic lead-based paint in toys imported from a Chinese toy-making company. These toys are intended for sale in the United Kingdom. Exposure to the paint over a long period of time could be fatal to children under 6 years old. What type of trade barrier would guarantee that no child in the United Kingdom would be exposed to the deadly lead-based paint? A. embargo B. quota C. exchange rate D. tariff

A. embargo

Which word has the same meaning as the economic term "tariff"? A. tax B. savings C. debt D. money

A. tax

What is the purpose of a tariff, such as a protective tariff? A. to increase the prices of imported goods and protect a country's own industries from foreign competition B. to decrease the prices of imported goods so a country's people can buy what they need for the lowest cost C. to increase the prices of exported goods so a country's own businesses are less likely to send their products to other nations D. to decrease the prices of exported goods so people in other countries will buy the foreign nation's product over one from home

A. to increase the prices of imported goods and protect a country's own industries from foreign competition

What does the term mixed economy mean?

Mixed is not a type of economy. Since there are no "pure command" economies (total government control) and no "market economies" (no government control), countries lie somewhere on a continuum, which means they are a mixture of command and market systems. Thus the term mixed. Mixed means that they lie somewhere on the continuum, but mixed is not one of the three basic economic systems. The more government control a country has in its economy, the closer it is to a command economy. The less government control a country has in its economy, the closer it is to a market economy.

currency exchange rate

Price of one country's currency expressed in terms of another country's currency; fluctuations can affect sales and profits made by global companies, and they can influence price and demand of a product in different countries

Gross Domestic Product (GDP)

The value of the total output of goods and services produced in a country in a given time period (normally one year). Measures the size of the economy.

three basic questions all economic systems have to answer

What to produce? How to produce? For whom to produce?

You are watching a speech by the President of the United States on T.V. with your parents. The President is explaining a pla n for improving the U.S. economy. In the speech, the President says: "Our workers must be prepared for the high-tech jobs of the 21st century. My plan will give incentives to companies who provide technology education and training for their employees." The President's plan is based on the conclusion that: a. an investment in human capital will increase the country's gross domestic product (GDP) b. adjusting the exchange rate will increase the profit the U.S. makes in international trade c. an investment in capital goods will increase the country's gross domestic product (GDP) d. an embargo on technology from other countries will help the U.S. economy.

a. an investment in human capital will increase the country's gross domestic product (GDP)

why would a country impose an embargo?

because people would have to buy domestic products

role of entrepreneurship

creates employment, utilizes and mobilizes resources for greater productivity, promotes the use of modern technology, creates social benefits from taxes

Capital

goods produced for use in future production