Module 5 Study Guide

Question 1

A system of producing, selling, and buying goods and services.

Answer 1

Economy

Question 2

When there are not enough resources to meet people’s wants.

Answer 2

Scarcity

Question 3

The value of something you give up in order to get something else.

Answer 3

Opportunity Cost

Question 4

The money an individual or business has left after paying expenses.

Answer 4

Profit

Question 5

Explain the graphs that cover supply and demand on pg. 160 — When supply is low, what is the demand?

Answer 5

The demand is high!

Question 6

Explain the graphs that cover supply and demand on pg. 160 — When supply is high what is the demand?

Answer 6

Demand is low.

Question 7

Explain the graphs that cover supply and demand on pg. 160 — Explain why profit is important to business.

Answer 7

Profit is the money for a business. You have a business to make a profit.

Question 8

Describe the four main factors of basic economic resources needed to produce goods and services?

Answer 8

Natural Resources - oceans, mines, and forests, raw materials

Capital - the goods used to make other goods and services

Labor - human time, effort, skills, and talent

Entrepreneurs - a person who organizes, manages, and assumes the risk of a business

Question 9

Give an example of economic interdependence of a country?

Answer 9

Japan makes cars that requires steel. But Japan does not have iron in its own country. So get the iron from Australia and Brazil through trading relationships.

Question 10

What is the difference between traditional and command economy?

Answer 10

Traditional is what has been done culturally.
Command is government controlled

Question 11

What are 3 types of mixed economies?

Answer 11

Communist, Capitalist, and Socialist.

Question 12

Give an example of each type of mixed economy.

Answer 12

Communist – Cuba

Capitalist – United States

Socialist – India

Question 13

How does the United States have free enterprise system?

Answer 13

We can choose what careers we want, want businesses we want to shop at, make, and how we
want to spend our money.

Question 14

What does governments collect from the people to take care of the country?

Answer 14

Taxes

Question 15

What does the government use what they collect to pay for?

Answer 15

Public goods.

Question 16

Explain the problem of taxes being too high.

Answer 16

Businesses won’t make as much profit.

Question 17

Explain the problem of taxes being too low.

Answer 17

Quality of life is low

Question 18

Name and describe the 4 levels of industry.

Answer 18

Primary Industry – Primary industries use natural resources to make money.

Secondary Industry – Secondary economic activities use raw materials to produce or manufacture something new.

Tertiary Industry – Tertiary economic activities provide goods and services to people and businesses.

Quaternary Industry – Quaternary industries process and distribute information. Skilled workers research and gather information.

Question 19

What is an issue that developing countries have?

Answer 19

Have less productive economies and a lower quality of life.

Question 20

How do developed countries help developing countries?

Answer 20

International organizations give them aid.

Question 21

What are the services that banks offer?

Answer 21

Allow customers to save money, earn money, and borrow money.

Question 22

What’s the difference in the safety standards of stocks and banks?

Answer 22

Stocks are not insured, and banks are.

Question 23

What is the difference between savings accounts and CD’s in banks?

Answer 23

Savings accounts allow customers to withdraw money anytime and pay lower interest rates.
CD’s pay higher interest rates, but the customer must agree to leave the money in the account for a certain term.

Question 24

Give an example of when you would use a savings account.

Answer 24

I want to save up to $100 to buy my Mom a present in two months.

Question 25

Give an example of when you would use a CD account.

Answer 25

I want to save $10,000 for a down payment on a car next year.

Question 26

Know why globalization has affected countries.

Answer 26

Introduced countries to different types of music, culture, holidays, drinks, and food.

Question 27

What are the different types of trade barriers?

Answer 27

Tariff – A tax that must be paid on imported items.

Quota – A limit on the amount of product imported or a limit on the amount of product imported at a lower tarriff.

Embargo – A restriction or ban of trade with a country for political purposes.

Question 28

What has increased globalization between countries?

Answer 28

Transportation, telecommunications, and internet

Question 29

What country did the United States have a trade embargo against in 1960?

Answer 29

Cuba

Question 30

What are the different economic Aid Organizations?

Answer 30

World Bank

International Monetary Fund (IMF)

World Trade Organization (WTO)

Question 31

What does the economic Aid Organization “World Bank” do?

Answer 31

Provides loans for large projects in countries that need them, but might not otherwise be able to pay for them.

Question 32

What does the economic Aid Organization “International Monetary Fund (IMF)” do?

Answer 32

Offers emergency loans to countries in financial trouble.

Question 33

What does the economic Aid Organization “World Trade Organization (WTO)” do?

Answer 33

Works with nations to help trade among nations flow as smoothly and freely as possible.