Reading Guides 26.2 and 26.3 - Economies

-state owned factories -> privately owned -stock markets created -people had to start making decisions based on supply, demand, and market prices

three changes Russia had to make to use elements of a market-based economy

Cuba and North Korea

two countries that are examples of a command economy

socialism, communism, slow growth, government control

what are the characteristics of a command economy?

competition, individual freedom, dealing with externalities, higher per capita GDP

what are the characteristics of a market economy?

the people- education, family planning, nutrition, and health care

what do developing countries need to invest in?

the country collapsed

what happened to the Soviet Union in 1991?

when population grows faster than GDP, per capita declines

what happens when population grows faster than GDP?

large amounts of debt

what has happened to many countries that borrowed large sums of money to spur economic growth?

gross domestic product

what is GDP?

countries whose average per capita income is only a fraction of that in more industrialized countries

what is a developing country?

individuals carry on their economic affairs freely, but are subject to some government intervention

what is a mixed economy?

price controls, subsidies, and other regulations

what is limiting the development of these markets?

the remarkable success of the major market economies of the world

what is the main reason that many nations in the world are experiencing transition in their economies?

farmers found it hard to compete with cheaper foreign food, unemployment rates high

what problems did China face by incorporating certain elements of a market economy?

the world bank

who has created a set of recommendations for developing nations?

United States

country that bases its economy of a market system

they supply a good or service that competes with private businesses

example of the government's direct role in the economy

acs as an umpire to make sure the economy operates smoothly and efficiently

example of the government's indirect role in the economy

they are made based on custom or habit

how are decisions made in a traditional economy?

produce and distribute goods and services

how does the government play a direct role in the economy?

alleged corruption of its government officials

how is nigeria, a nation rich in oil, still a relatively poor nation?

central planning body

in a command economy, most economic decisions are made by what?

each person has a smaller share of what the economy produces, such as food and housing. the country has a lower per capita GDP.

rapid population growth can also lead to what other problems?

developed country

the United States is considered what kind of country?