ECONOMIC UNDERSTANDINGS

UNIT ONE

SOUTHWEST ASIA

SOUTHWEST ASIA (MIDDLE EAST)

ECONOMIC UNDERSTANDINGS

ECONOMIC UNDERSTANDINGS

SS7E5 – THE STUDENT WILL ANALYZE DIFFERENT ECONOMIC SYSTEMS.

CRCT PREP 107 -108

EQ – WHAT ARE THE THREE BASIC ECONOMIC

QUESTIONS?

A. COMPARE HOW TRADITIONAL, COMMAND, AND MARKET ECONOMIES ANSWER THE ECONOMIC

QUESTIONS OF (1) WHAT TO PRODUCE? (2) HOW TO

PRODUCE? (3) FOR WHOM TO PRODUCE? CRCT PREP

107 -108

ECONOMICS IS USING LIMITED RESOURCES TO

SATISFY UNLIMITED NEEDS AND WANTS.

HOW DO WE DETERMINE WHAT KIND OF ECONOMIC

SYSTEM IS PRESENT?

• BY HOW THE SYSTEM ANSWERS THE 3 ECONOMC QUESTIONS

• WHAT TO PRODUCE?

• HOW TO PRODUCE?

• FOR WHOM TO PRODUCE?

WHAT ARE THE THREE ECONOMIC QUESTIONS?

• WHAT IS GOING TO BE PROCUCED?

• HOW IS IT GOING TO BE PRODUCED?

• FOR WHOM IS IT GOING TO BE PRODUCED?

3 TYPES OF ECONOMIC SYSTEMS

TRADITIONALCOMMAND

MARKET

IN TRADITIONAL ECONOMIC SYSTEMS,

MOST ECONOMIC DECISIONS ARE BASED UPON LONGSTANDING

CUSTOMS.

WHICH ECONOMIC SYSTEM IS BASED ON OLD

TRADITIONS AND CUSTOMS?

• TRADITIONAL

IN COMMAND ECONOMIC SYSTEMS, MOST

ECONOMIC DECISIONS ARE MADE BY

GOVERNMENT PLANNERS.

WHICH ECONOMY SYSTEMS DEPENDS ON GOVERNMENT

PLANNERS TO MAKE DECISIONS?

• COMMAND

IN MARKET ECONOMIC SYSTEMS, CONSUMERS,

THROUGH THEIR PURCHASES, MAKE MOST

ECONOMIC DECISIONS.

WHICH ECONOMIC SYSTEM DEPENDS ON CONSUMERS

WISHES?

• MARKET

CHARACTERISTICS OF PURE MARKET ECONOMIES

• LITTLE OR NO GOV. CONTROL

• FREEDOM OF ENTERPRISE

• FREEDOM OF CHOICE

• PRIVATE PROPERTY

• PROFIT INCENTIVE

• COMPETITION

NO COUNTRY HAS A PURE COMMAND OR PURE MARKET ECONOMIC

SYSTEM, MOST COUNTRIES COMBINE ASPECTS OF BOTH OF THESE PURE ECONOMIC

SYSTEMS.

MIXED ECONOMIES CONTAIN

CHARACTERISTICS OF BOTH A COMMAND AND

MARKET ECONOMY. MOST ECONOMIC SYSTEMS IN THE WORLD TODAY ARE

MIXED.

TRADITIONAL, COMMAND, AND MARKET SYSTEM ARE

THE THREE TYPES OF ECONOMIC SYSTEMS.

WHAT ECONOMIC SYSTEM COMBINES MARKET AND

COMMAND SYSTEMS?

• MIXED ECONOMIC SYSTEM

WHAT ARE THE THREE BASIC ECONOMIC

SYSTEMS?• MARKET

• COMMAND

• TRADITIONAL

SS7E5 THE STUDENT WILL ANALYZE DIFFERENT ECONOMIC SYSTEMS.

EQ – WHAT IS A MIXED ECONOMY?

B. EXPLAIN HOW MOST COUNTRIES HAVE A MIXED ECONOMY LOCATED ON A

CONTINUUM BETWEEN PURE MARKET AND PURE

COMMAND.

CRCT PREP – 108 - 109

• How many basic types of economic systems are there?

• Name the economic systems.

• Which economic system do most textbooks say is the most common throughout the world?

• How many basic types of economic systems are there? 3

• Name the economic systems. Traditional, Command, Market

• Which economic system do most textbooks say is the most common throughout the world? Mixed. The GCEE states that mixed is not an economic system but rather a blending of two different types of systems.

Economic Systems

Pure

MarketPure

Command

Economic

Systems

Pure

MarketPure

Command

Iran

45%

Saudi Arabia

64%

Israel

68%

Economic

Systems

Pure

MarketPure

Command

Nigeria

55%

South Africa

64%

Economic

Systems

Pure

MarketPure

Command

North Korea

2%

India

54%

Japan

73%China

53%

QUIZ TO HERE

QUIZ IN 3 MINUTES

GET OUT SOME BLANK PAPER AND NUMBER 1-10

QUESTIIONS 1, 2, 3. WHAT ARE THE THREE BASIC

ECONOMIC QUESTIONS?

4. HOW DO WE DETERMINE WHAT KIND OF ECONOMIC

SYSTEM IS PRESENT?

5. WHICH ECONOMIC SYSTEM IS BASED ON OLD

TRADITIONS AND CUSTOMS?

QUESTIONS 6, 7, 8. WHAT ARE THE THREE BASIC ECONOMIC SYSTEMS?

9. IN WHAT KIND OF ECONOMIC SYSTEM DO GOVERNMENT PLANNERS ANSWER THE 3

BASC ECONOMIC QUESTIONS?• A. traditional

• B. COMMAND

• C. MARKET

10. WHAT DO WE CALL AN ECONOMY THAT HAS

FEATURES OF A MARKET ECONOMY AND FEATURES

OF A COMMAND ECONOMY?

A. COMPARE AND CONTRAST THE ECONOMIC SYSTEMS IN ISRAEL,

SAUDI ARABIA, IRAN AND TURKEY.

CRCT PREP 109

CB – 144-146

EQ – WHAT ARE THE FEATURES OF THE

ECONOMIC SYSTEMS IN ISRAEL, SAUDI ARABIA, AND

TURKEY.

ISRAEL

ISRAEL’ ECONOMY(1) WHAT TO PRODUCE? A

LARGE PROTION OF ISRAEL’S GDP COMES FROM

HIGH TECH MANUFACTURING,

FINANCIAL SERVICES, AND AGRICULTURE.

(2) HOW TO PRODUCE? ISRAEL HAS SUBSTANTIAL

GOVERNMENT OWNERSHIP OF BUSINESS, BUT IS

GRADUALLY PRIVATIZTING COMPANIES.

FOR WHOM TO PRODUCE? IN ISRAEL THE PRIVATE

SECTOR PRODUCES GOODS AND SERVICES FOR

DOMESTIC AND INTERNATIONAL MARKETS

BASED ON THE MARKET PRICE.

WHERE WOULD YOU PLACE ISRAEL ON THE CONTINUUM?

Economic SystemsISRAEL

Pure

MarketPure

Command

WHERE WOULD YOU PLACE ISRAEL ON THE CONTINUUM?

• ISRAEL WOULD FALL SLIGHTLY TO THE MARKET SIDE OF CENTER OF THE CONTINUUM

SAUDI ARABIA

WHAT TO PRODUCE?

SAUDI ARABIA’S ECONOMYWHAT TO PRODUCE?SAUDI ARABIA IS THE

WORLD’S LEADING PRODUCER OF OIL. THE

SAUDI GOVERNMENT CONTINUES TO INVEST IN

PETROCHEMICALS, MINING AND REFINING.

SAUDI ARABIA

HOW TO PRODUCE?

(2) HOW TO PRODUCE?OVER 95% OF THE OIL

INDUSTRY IN THE COUNTRY IS OPERATED BY THE

GOVERNMENT. MOST OTHER MAJOR INDUSTRIES HAVE

SIGNIFICANT GOVERNMENT GOVERNMETN INVOLVEMENT.

CONTINUED

SAUDI ARABIA RELIES HEAVILY ON SPECIALIZED

LABOR FROM OTHER COUNTRIES. ESTIMATES

ARE THAT A THIRD OF THE LABOR FORCE FALLS INTO

THIS CATEGORY.

SINCE THE 1980”S SAUDI GOVERNMENT HAS BEEN

TRYING TO INCREASE PRIVATE OWNERSHIP OF

BUSINESS AND ENCOURAGE MORE JOINT VENTURES WITH PRIVATE FOREIGN

COMPANIES.

SAUDI ARABIA

FOR WHOM TO PRODUCE?

FOR WHOM TO PRODUCE? ONE THIRD OF SAUDI

ARABIA’S GDP IS BASED ON EXPORTS TO OTHER

COUNTRIES. (THIS IS DUE TO THE ECONOMY’S RELIANCE

ON THE OIL SECTOR.)

WHERE WOULD YOU PLACE SAUDI ARABIA ON THE

CONTINUUM?

Economic SystemsSAUDI ARABIA

Pure

MarketPure

Command

WHERE WOULD YOU PLACE SAUDI ARABIA ON A

CONTINUUM?

• SAUDI ARABIA WOULD FALL TO THE COMMAND SIDE OF THE CENTER OF THE CONTINUUM

IRAN

WHAT TO PRODUCE?

IRANWHAT TO PRODUCE? LIKE SAUDI ARABIA IRAN HAS

GREAT OIL WEALTH.

IRAN

HOW TO PRODUCE?

IRAN HOW TO PRODUCE? IRAN

HAS MORE OF A MIXED ECONOMY THAN SAUDI ARABIA INSPITE OF THE

FACT THAT THE GOVERNMENT TRIES TO KEEP A TIGHT CONTROL

OVER THE ECONOMY.

IRAN

FOR WHOM TO PRODUCE?

IRAN –FOR WHOM TO PRODUCE? THE COMMAND SIDE OF IRAN’S ECONOMY IS

NOT VERY EFFICIENT. DESPITE THE GREAT WEALTH

CREATED BY THE OIL INDUSTRY NOT MANY

IRANIANS SHARE IN THAT WEALTH.

WHAT IS IRAN’S MOST IMPORTANT RESOURCE?

• OIL

IRAN’S ECONOMY HAS BECOME MORE OF A MIXED

ECONOMY IN SPITE OF IRAN’S GOVERNMENT

ATTEMPTING TO KEEP MORE CONTROL OF THE ECONOMY

HOWEVER

Economic SystemsIRAN

Pure

MarketPure

Command

TURKEY’S ECONOMY

HOW DOES TURKEY ANSWER THE QUESTION – WHAT TO

PRODUCE?

• TURKEY HAS A DIVERSIFIED ECONOMY WITH LARGE SERVICE, MANUFACTURING, AND AGRICULTURAL SECTORS.

HOW DOES TURKEY DECIDE – HOW TO PRODUCE?

• SINCE THE LATE 1980’S, TURKEY HAS GRADUALLY MOVED FROM A GOVERNMETN DIRECTED ECONOMY TO MORE PRIVATE ENTERPRISE

HOW DOES TURKEY DECIDE – FOR WHOM TO PRODUCE?

• ONE FIFTH OF TURKEY’S PRODUCTION IS EXPORTED. THE REMAINDER IS CONSUMED BY DOMESTIC CONSUMERS AND THE GOVERNMENT

WHERE WOULD YOU PLACE TURKEY ON THE

CONTINUUM?

Economic SystemsTURKEY

Pure

MarketPure

Command

WHERE WOULD YOU PLACE TURKEY ON THE

CONTINUUM?

• TURKEY WOULD FALL BETWEEN SAUDI ARABIA AND ISRAEL ON THE MARKET SIDE OF THE CONTINUUM

Economic

Systems

Pure

MarketPure

Command

Iran

45%

Saudi Arabia

64%

Israel

68%

EQ WHAT IS VOLUNTARY TRADE?

STANDARD SS7E6 – THE STUDENT WILL EXPLAIN

HOW VOLUNTARY TRADE BENEFITS BUYERS AND

SELLERS IN SOUTHWEST ASIA (MIDDLE EAST)

WHAT IS VOLUNTARY TRADE?

• MAY BE THE MOST BASIC OF ECONOMIC THEORY

• VT IS TRADE THAT OCCURS BECAUSE IT BENEFITS THE PARTIES THAT ARE INVOLVED

EQ – WHAT IS SPECIALIZATION AND HOW

DOES IT HELP TRADE?

A. EXPLAIN HOW SPECIALIZATION

ENCOURAGES TRADE BETWEEN COUNTRIES.

CRCT PREP 111

WHAT IS SPECIALIZATION?

• SPECIALIZATION OCCURS WHEN ONE NATION CAN PRODUCE A GOOD OR SERVICE AT A LOWER OPPORTUNITY COST THAN ANOTHER NATION.

• MIDDLE EAST-CAN PRODUCE OIL CHEAPER THAN THE U.S.

• THE U.S. CAN PRODUCE COAL CHEAPER THAN EUROPEAN NATIONS

WHAT ARE THE POTENTIAL PROBLEMS OF OVER-

SPECIALIZATION? FOR EXAMPLE ONE CROP? ONE PRODUCT?

• IF THAT CROP OR PRODUCT FAILS SO DOES THAT NATIONS ECONOMY

• THERE IS A RISK WHEN AN ECONOMY LACKS DIVERSIFICATION (MANY DIFFERENT INDUSTRIES AND CROPS)

WHAT IS GOING TO HAPPEN TO THE OIL PRODUCING COUNTRIES OF THE MIDDLE EAST WHEN AN

ALTERNATIVE FORM OF ENERGY IS DEVELOPED?

• IF THESE COUNTRIES DO NOT DIVERSIFY THEIR ECONOMIES – THESE COUNTRIES WILL FAIL

LOOK AT THE LAND USE AND RESOURCES MAP ON PAGE

77 AND 169. WHY MIGHT TRADE HAPPEN BETWEEN SAUDI ARABIA AND SOUTH

AFRICA?• SAUDI ARABIA MAY WANT GOLD AND

SOUTH AFRICA MAY NEED TO IMPORT OIL

WHY MIGHT THE UNITED STATES TRADE FOOD

GROWN IN THE U.S. TO SAUDI ARABIA?

• THE TRADE MAY BE FOOD FOR OIL

WHAT IS OPPORTUNITY COST?

• The cost of passing up the next best choice when making a decision. For example, if an asset such as capital is used for one purpose, the opportunity cost is the value of the next best purpose the asset could have been used for.

WHY COUNTRIES ENGAGE IN TRADE?

• EACH COUNTRY SPECIALIZES IN SOMETHING THE OTHER COUNTRY NEEDS AND PRODUCES IT AT A LOWER OPPORTUNITY COST

SS7E7C. THE STUDENT WILL DESCRIBE FACTORS THAT

INFLUENCE ECONOMIC GROWTH AND EXAMINE

THEIR PRESENCE OR ABSENCE IN ISRAEL, SAUDI

ARABIA, AND IRAN.

SS7E7C – EXPLAIN THE ROLE OF OIL IN THESE

COUNTRIES. (ISRAEL, SAUDI ARABIA, AND IRAN)

CRCT PREP 117- 119

WHY ARE OIL AND GAS VALUABLE NATURAL

RESOURCES?

• THESE NATURAL RESOURCES ARE NECESSARY TO DRIVE THE WORLD’S INDUSTRIAL NATIONS

• STRATIGIC RESOURCES

WHAT PERCENTAGE OF THE OIL THAT THE U.S. USES IS

IMPORTED?

• 50%

HOW DOES IT BENEFIT SAUDI ARABIA AND IRAN TO

BELONG TO OPEC?

• OPEC MONITORS THE PRICE OF OIL AND KEEPS THAT PRICE HIGH

B. COMPARE AND CONTRAST DIFFERENT TYPES OF TRADE BARRIERS SUCH AS TARIFFS,

QUOTAS, AND EMBARGOS.

EQ - LIST AND EXPLAIN DIFFERERENT TYPES OF

TRADE BARRIERS?CRCT - 112

WHAT IS A TRADE BARRIER?

• A TRADE BARRIER IS ANY THING THAT HINDERS TRADE

• TRADE BARRIER CAN BE PHYSICAL, ECONOMIC, OR POLITICAL. ETC

NAME A PHYSICAL TRADE BARRIER?

• MOUNTAINS• DESERTS• RAINFORESTS ETC.

THESE LANDSCAPES MAKE IT DIFFICULT TO TRADE

LIST THE ECONOMIC OR FINANCIAL TRADE

BARRIERS.

• TARIFFS – TAX ON IMPORTS OR EXPORTS (SUVS)

• QUOTAS – LIMIT ON THE AMOUNT OR QUANTITY THAT CAN BE IMPORTED OR EXPORTED (LUMBER)

• EMBARGO – GOVERNMENT ORDER PROHIBITING TRADE WITH ANOTHER NATION – (IRAQ, CUBA)

THE UNITED STATES HAS BANNED IMPORTING

PRODUCTS MADE IN CUBA. THIS IS AN EXAMPLE OF WHAT

TYPE OF TRADE BARRIER?

• EMBARGO

IRAQ IGNORED THE UNITED NATIONS REQUEST TO ALLOW U.N. INSPECTORS TO SEARCH FOR WMD’S, THE UN STOPPED TRADE WITH IRAQ EXCEPT FOR FOOD AND MEDICINE. THIS IS

AN EXAMPLE OF AN …….

• EMBARGO

TO HELP DOMESTIC CAR MANUFACTURERS, THE

GOVERNMENT PUTS A TAX ON IMPORTED CARS, WHAT TYPE OF TRADE BARRIER IS

THIS?

• TARIFF

A GOVERNMENT HAS PUT A LIMIT ON THE AMOUNT OF

LUMBER THAT CAN BE SOLD TO FOREIGN NATIONS, WHAT TYPE OF TRADE

BARRIER IS THIS?

• QUOTA

IN 1973, OPEC NATIONS DECIDED TO PUNISH THE

UNITED STATES FOR THEIR SUPPORT OF ISRAEL, THEY

STOPPED SHIPPING OIL TO THE U.S., THIS IS AN EXAMPLE OF …

• EMBARGO

EQ – WHAT IS THE ROLE OF OPEC IN REGARD TO THE

WORLD’S OIL SUPPLY?

C. EXPLAIN THE PRIMARY FUNCTION OF THE ORGANIZATION OF

PETROLEUM EXPORTING COUNTRIES (OPEC)

CRCT PREP 113

OPEC CONTROLS THE PRICE OF OIL BY CONTROLING THE

AMOUNT (SUPPLY) OF OIL ON THE MARKET.

OPEC IS USING THE ECONOMIC PRINCIPLES OF SUPPLY AND DEMAND TO

CONTROL THE PRICE OF OIL.

D. EXPLAIN WHY INTERNATIONAL TRADE

REQUIRES A SYSTEM FOR EXCHANGING CURRENCIES

BETWEEN NATIONS.

CRCT 114

CURRENCY EXCHANGES PROVIDE A PROCEDURE FOR DETERMINING THE VALUE OF ONE COUNTRY’S CURRENCY

IN TERMS OF ANOTHER COUNTRY’S CURRENCY.

WITHOUT CURRENCY EXCHANGE INTERNATIONAL

TRADE WOULD BE DIFFICULT.

WHY IS IT IMPORTANT FOR NATIONS TO HAVE A

SYSTEM TO CONVERT FROM ONE CURRENCY TO

ANOTHER?• THIS PROCESS MAKES IF POSSIBLE TO

BUY AND SELL GOODS BETWEEN NATIONS WITH DIFFERENT TYPES OF MONEY.

AFTER THE PERSIAN GULF WAR, THE UNITED NATIONS IMPOSED AN EMBARGO ON IRAQ. WHAT WOULD BE THE REASON AN

EMBARGO WAS USED BY THE UNITED NATIONS?

• A. TO RESTRICT TRADE WITH IRAQ UNTIL THEY MET UN REQUIREMENTS

• B. TO INCREASE THE COST OF IRAQI PRODUCTS TO HELP IRAQ’S ECONOMY

• C. TO PROTECT IRAQ’S DOMESTIC INDUSTRY SO IT WOULD GROW AFTER THE WAR

• D. TO CONTROL THE IRAQI ECONOMY AFTER THE WAR

OIL IS THE MAJOR EXPORT OF SAUDI ARABIA TO MANY

DIFFERENT COUNTRIES. SAUDI ARABIA’S INTERNATIONAL

TRADE IN OIL IS MADE MUCH EASIER BY

• A. USE IF A WORLD WIDE CURRENCY• B. A SYSTEM TO EXCHANGE CURRENCY

BETWEEN COUNTRIES• C. TRADING ONLY WITH COUNTRIES THAT HAVE

THE SAME CURRENCY• D. TRADE OF OIL FOR OTHER NEEDED GOODS

SO CURRENCY IS NOT NEEDED.

WHAT IS A TRADE BARRIERS?

• A TRADE BARRIERS IS ANYTHING THAT RESTRICTS TRADE. TRADE BARRIERS CAN BE PHYSICAL, ECONOMIC, OR POLITICAL.

WHAT IS A PHYSICAL TRADE BARRIER.

• A PHYSICAL TRADE BARRIER IS A TYPE OF LANDFORM THAT MAKES TRADE DIFFICULT.

• MOUNTAINS, DESERTS, RAINFORESTS, ETC.

BESIDES THE PHYSICAL TRADE BARRIERS, WHAT

ARE THE DIFFERENT TYPES OF TRADE BARRIERS?

• TARIFFS

• QUOTAS

• EMBARGOS

WHAT IS A TARIFF?

• A TARIFF IS A TAX ON A GOOD BEING IMPORTED OR EXPORTED

• A PROTECTIVE TARIFF IS A TAX ON A GOOD THAT IS BEING IMPORTED BECAUSE THE GOVERNMENT WANTS TO PROTECT A DOMESTIC INDUSTRY FROM COMPETITION

• EX. TAX ON IMPORTED SUV’S

WHAT IS A QUOTA?

• A QUOTA IS A LIMIT ON THE AMOUNT OR QUANTITY OF GOOD THAT CAN BE IMPORTED OR EXPORTED.

THE UNITED STATES HAS QUOTA APPLIED TO

EXPORTED LUMBER. IF TRADE STARTS UP WITH

CUBA, THERE WILL PROBABLY BE A QUOTA PLACED ON IMPORTED

SUGAR.

WHAT IS AN EMBARGO?

• AN EMBARGO OCCURS WHEN A ORGANIZATION PROHIBITS TRADE WITH A COUNTRY.

• A government prohibition against the shipment of certain products to a particular country for economic or political reasons.

AFTER THE PERSIAN GULF, AGAINST WHAT COUNTRY

DID THE U.N. PLACE AN EMBARGO?

• A. KUWAIT

• B. IRAN

• C. IRAQ

C. EXPLAIN THE PRIMARY FUNCTION OF THE ORGANIZATION OF

PETROLEUM EXPORTING COUNTRIES (OPEC).

EQ – WHAT IS THE ROLE OF OPEC?

WHAT DOES O-P-E-C STAND FOR?

• ORGANIZATION OF PETROLEUM EXPORTING COUNTRIES

WHAT ROLE DOES OPEC PLAY IN THE OIL MARKET?

• OPEC CONTROLS THE PRICE OF OIL BY CONTROLLING THE SUPPLY OF OIL ON THE MARKET

• SUPPLY AND DEMAND

QUIZ

GET PAPER OUT

PUT YOUR NAME AT THE TOP

ECONOMICS QUIZ

NAME ________________

1. ISRAEL PRODUCES ALL OF THE FOLLOWING EXCEPT?

• A. HIGH TECH MANUFACTURING

• B. FINANCIAL SERVICES

• C. AGRICULTURAL PRODUCTS

• D. PETROLEUM PRODUCTS

2. WHO OWNS THE BUSINESSES IN ISRAEL?

• A. ISRAEL HAS SUBSTANTIAL GOVERNMENT OWNERSHIP BUT IS GRADUALLY PRIVATIZING

• B. ALL BUSINESSES ARE OWNED PRIVATELY

3. SAUDI ARABIA IS THE WORLD’S LEADING

PRODUCER OF _____

4. WHAT PERCENTAGE OF THE OIL INDUSTRY IS

OPERATED BY THE SAUDI GOVERNMENT?

• A. 40%

• B. 50%

• C. 75%

• D. 95%

5. TURKEY’S ECONOMY IS MOVING FROM A GOVERNMENT DIRECTED ECONOMY TO MORE PRIVATE ENTERPRISES, THIS

MAKES TURKEY’S ECONOMY A … ECONOMY.

• A. COMMAND

• B. MIXED

• C MARKET

6. THIS OCCURS WHEN A NATION CAN PRODUCE A GOOD

OR SERVICE AT A LOWER OPPORTUNITY COST THAN

ANOTHER NATION.

A. SPECIALIZATION B. TRADE DEFICIT

C. VOLUNTARY TRADE

7. WHEN A COUNTRY HAS MANY DIFFERENT INDUSTRIES, THAT

COUNTRY IS SAID TO BE A. SPECIALIZEDB. DIVERSIFIED

C. INCORPORATED

8. WHEN A COUNTRY LIMITS THE AMOUNT OF A GOOD

THAT IS IMPORTED OR EXPORTED IT IS APPLYING A

A. EMBARGOB. QUOTAC. TARIFF

9. WHEN A COUNTRY APPLY A TAX TO AN IMPORT OR

EXPORT THIS IS CALLED A ..

• A. TRADE EMBARGO

• B. QUOTA

• C. TARIFF

10. FOR THE PAST 60+ YEARS, THE UNITED STATES

GOVERNMENT HAS PROHIBITED TRADE WITH CUBA, THIS IS AN

EXAMPLE OF A/AN ….

• A. TARIFF

• B. EMBARGO

• C. QUOTA

11. AFTER THE PERSIAN GULF WAR THE U.N. PROHIBITED TRADE WITH IRAQ. WHY?

• A. UNTIL IRAQ MET UN REQUIREMENTS

• B. TO INCREASE THE COST OF IRAQ’S PRODUCTS

• C. TO PROTECT IRAQ’S INDUSTRIES

• D. TO CONTROL IRAQ’S ECONOMY AFTER THE WAR

12. HOW DOES OPEC CONTROL THE PRICE OF OIL?

• A. BY CONTROLLING DEMAND

• B. BY CONTROLLING OIL TANKERS

• C. BY CONTROLLING THE SUPPLY OF OIL ON THE MARKET

13. ISRAEL SPECIALIZES IN

• A. MEDICAL TECHNOLOGIES

• B. INDUSTRIAL TECHNOLOGIES

• C. SCIENTIFIC TECHNOLOGIES

• D. AGRICULTURAL TECHNOLOGIES

14. WHAT HAPPENS TO THE PRICE OF GASOLINE WHEN

OPEC DECIDE TO LIMIT (CUT) PRODUCTION

• A. PRICES RISE

• B. PRICES DROP

• C. PRICES STAY THE SAME

• D. OIL STOPS BEING SOLD

15. WHY IS CURRENCY EXCHANGE IMPORTANT?

• A. CONVERTING TO DIFFERENT CURRENCIES MAKES GOODS COST LESS

• B. BANKS ARE NOT ABLE TO HANDLE DIFFERENT KINDS OF CURRENCIES

• C. THIS MAKES IT POSSIBLE TO BUY AND SELL GOODS BETWEEN NATIONS WITH DIFFERENT TYPES OF MONEY

CURRENCY EXCHANGES PROVIDE A PROCEDURE FOR DETERMINING THE VALUE OF ONE COUNTRY’S CURRENCY

IN TERMS OF ANOTHER COUNTRY’S CURRENCY.

WITHOUT CURRENCY EXCHANGE INTERNATIONAL

TRADE WOULD BE DIFFICULT.

WHY IS IT IMPORTANT FOR NATIONS TO HAVE A

SYSTEM TO CONVERT FROM ONE CURRENCY TO

ANOTHER?• THIS PROCESS MAKES IF POSSIBLE TO

BUY AND SELL GOODS BETWEEN NATIONS WITH DIFFERENT TYPES OF MONEY.

AFTER THE PERSIAN GULF WAR, THE UNITED NATIONS IMPOSED AN EMBARGO ON IRAQ. WHAT WOULD BE THE REASON AN

EMBARGO WAS USED BY THE UNITED NATIONS?

• A. TO RESTRICT TRADE WITH IRAQ UNTIL THEY MET UN REQUIREMENTS

• B. TO INCREASE THE COST OF IRAQI PRODUCTS TO HELP IRAQ’S ECONOMY

• C. TO PROTECT IRAQ’S DOMESTIC INDUSTRY SO IT WOULD GROW AFTER THE WAR

• D. TO CONTROL THE IRAQI ECONOMY AFTER THE WAR

OIL IS THE MAJOR EXPORT OF SAUDI ARABIA TO MANY

DIFFERENT COUNTRIES. SAUDI ARABIA’S INTERNATIONAL

TRADE IN OIL IS MADE MUCH EASIER BY

• A. USE IF A WORLD WIDE CURRENCY• B. A SYSTEM TO EXCHANGE CURRENCY

BETWEEN COUNTRIES• C. TRADING ONLY WITH COUNTRIES THAT HAVE

THE SAME CURRENCY• D. TRADE OF OIL FOR OTHER NEEDED GOODS

SO CURRENCY IS NOT NEEDED.

NEW QUIZ STARTS HERE

SS7E7 THE STUDENT WILL DESCRIBE FACTORS THAT

INFLUENCE ECONOMIC GROWTH AND EXAMINE

THEIR PRESENCE OR ABSENCE IN ISRAEL, SAUDI

ARABIA, AND IRAN.

CRCT – 109-110

SS7E7B. EXPLAIN THE RELATIONSHIP BETWEEN INVESTMENT IN CAPITAL

(FACTORIES, MACHINERY, AND TECHNOLOGY AND

GROSS DOMESTIC PRODUCT GDP.

CRCT PREP – 116-117

FACTORIES, MACHINERY, COMPUTERS ETC. ARE

EXAMPLES OF ….

• CAPITAL GOODS

SS7E7A – EXPLAIN THE RELATIONSHIP BETWEEN INVESTMENT IN HUMAN

CAPITAL (EDUCATION AND TRAINING) AND GROSS

DOMESTIC PRODUCT (GDP)

CRCT PREP – 115-116

THE SKILLS AND EDUCATION THAT WORKERS HAVE IS

CALLED ……

• HUMAN CAPITAL

WHAT IS DETERMINED WHEN WE CALCULATE THE TOTAL

VALUE OF GOODS AND SERVICES PRODUCED BY A

COUNTRY IN A SINGLE YEAR?

• GDP – GROSS DOMESTIC PRODUCT

WHEN WE CALCULATE THE TOTAL AMOUNT OF GOODS AND

SERVICES PRODUCED IN A COUNTRY AND DIVIDE THAT

NUMBER BY THE TOTAL POPULATION, WHAT DOES THAT

NUMBER REPRESENT?

• GDP PER CAPITA

ISRAELLIT. RATE 96.9%

REAL ECONOMIC GROWTH RATE IN 2007 WAS 4.8%

REAL ECONOMIC GROWTH RATE IS THE PERCENT THE GDP

INCREASED OVER THE PREVIOUS YEAR.

ISRAEL’S LIT. RATE UP 85% FROM 1980

SAUDI ARABIALITERACY RATE IS 78.8%

REAL ECONOMIC GROWTH RATE IN 2007 WAS 6.1%

SAUDI ARABIA’S LIT. RATE IS UP 48.5% FROM 1980

IRAN LIT. RATE 79%REAL ECONOMIC GROWTH

RATE 2007 WAS 6.2%

IRAN’S LITERACY RATE IS UP FROM 50% IN 1980

SS7E7B. EXPLAIN THE RELATIONSHIP BETWEEN INVESTMENT IN CAPITAL

(FACTORIES, MACHINERY, AND TECHNOLOGY) AND

GDP.

CRCT 116-117

INVESTMENT IN CAPITAL GOODS INCREASES

PRODUCTION AND OPENS EXPORTATION OF GOODS. INVESTMENT IN CAPITAL

GOODS TENDS TO INCREASE GDP.

WHAT IS GDP?

• GROSS DOMESTIC PRODUCT

• GDP is the market value of all final goods and services made within the borders of a nation in a year.

WHAT IS REAL GROWTH RATE GDP?

• economic growth rate - The pace at which economic growth increases during a given interval.

ISRAEL

CAPITAL INVESTMENT-18% OF GDP

REAL GROWTH RATE-4.8%

SAUDI ARABIA

CAPITAL INVESTMENT-19.5% OF GDP

REAL GROWTH RATE 6.1%

IRAN

CAPITAL INVESTMENT – 27.7% GDP

REAL GRWOTH RATE 6.2%

C. EXPLAIN THE ROLE OF OIL IN THESE COUNTRIES.

CRCT 117-119

THE IMPACT OF THE NATURAL RESOURCES OF

OIL INCREASE THE GDP OF A COUNTRY THAT POSSESSES

THAT OIL.

ISRAEL

GDP-$170 BILLION (2008)

OIL – NO SIGNIFICANT RESERVES

SAUDI ARABIA

GDP - $527 BILLION 2008

OIL – LARGEST PRODUCER AND EXPORTER OF OIL IN THE

WORLD. 90% OF GOVERNMENT REVENUES COME FROM THE

OIL INDUSTRY.

IRAN

GDP - $852.6 BILLION 2008

OIL THE ECONOMY RELIES PRIMARILY ON THE OIL

INDUSTRY. 80% OF EXPORTS ARE PETROLEUM AND

PETROLEUM PRODUCTS.

SS7E7D. DESCRIBE THE ROLE OF AN ENTREPRENEUR.

CRCT PREP - 119

EQ – WHAT IS THE IMPORTANCE OF AN

ENTREPRENEUR?

WHAT IS AN ENTREPRENEUR?

• An entrepreneur is a person who has possession of an enterprise, or venture, and assumes significant accountability for the inherent risks and the outcome.

A PERSON THAT IS WILLING TO RISK HIS MONEY, TIME, EFFORT ETC. TO START A

BUSINESS IS CALLED AN …• ENTREPRENEUR – RISK TAKER

• ENTREPRENEURSHIP IS ONE OF THE FOUR FACTORS OF PRODUCTION THE OTHER THREE FACTORS ARE LAND, LABOR, AND CAPITAL

ENTREPRENEURS ARE VITAL TO MAINTAINING AND

DEVELOPING ECONOMIES. (INNOVATIONS, IDEAS, ETC.)

ISRAEL AND ENTREPRENEURSHIP – ISRAEL IS MODERATELY OPEN TO

ENTRPRENEURSHIP. IT IS EASY TO START A BUSINESS, BUT IT TAKES

LONGER THAN THE WORLD AVERAGE. IN ISRAEL, PRIVATE

PROPERTY IS WELL PROTECTED BY LAW. FOREIGN INVESTMENT IS

ENCOURAGED BUT LIMITED IN SOME CIRCUMSTANCES.

SAUDI ARABIA HAS BECOME INCREASINGLY OPEN TO

ENTREPRENEURSHIP. STARTING A BUSINESS IS MADE EASY BY THE

GOVERNMENT, COMPARED TO THE WORLD AVERAGE. PRIVATE

PROPERTY IS PROTECTED VERY WELL. FOREIGN INVESTMENT IS ENCOURAGED ALTHOUGH SOME MUST HAVE SAUDI PARTNERS.

IRAN IS NOT VERY OPEN TO ENTREPRENEURSHIP. IRANS

ECONOMY IS CENTRALIZED AND REGULATIONS MAKE IT DIFFICULT

FOR INDIVIDUALS TO OPEN BUSINESSES. THERE IS LITTLE

PROTECTION OF PRIVATE PROPERTY RIGHTS, AND THE GOVERNMENT ALLOWS VERY LITTLE FOREIGN INVESTMENT.

SAUDI ARABIA’S LITERACY RATE INCREASED FROM APPROX. 48% in 1980 TO OVER 78% IN 2009. WHY IS THIS IMPORTANT FOR THE SAUDI

ARABIAN ECONOMY?• A. IT HAS HELPED INCREASE FOREIGN TRADE• B. IT CAUSED A DECREASE IN FOREIGN DEBT• C. IT HELPED TO INCREASE THE COUTRY’S

GDP• D. IT RESULTED IN FEWER JOBS FOR SAUDI

CITIZENS

IN IRAN THE ECON. IS HIGHLY CENTRALIZED AND REGULATIIONS

HINDER PRIVATE INDIVIDUALS FROM OPERATING BUSINESSES.

SAUDI ARABIA HAS MADE OWNING A BUSINESS EASY. WHAT IS THE

IMPACT OF ENTREPRENEURSHIP?• A. ENTRE. ARE NOT AFFECTED BY GOV. REGULATIONS• B. IT LIMITS THE ROLE OF ENTRE. IN BOTH COUNTRIES• C. ENTRE. WILL HELP IN SAUDI ARABIA BUT NOT IN IRAN• D. BOTH IRAN AND SAUDI ARABIA WILL BENEFIT FROM

THE EFFORTS OF ENTRE.