All of the activities that people do to earn a living.

Example: going to work, making things, selling things, buying things, and trading services.

There are four levels of economic activity:

Primary Industries

Secondary Industries

Tertiary Industries

Quaternary Industries

Activities that directly involve natural resources or raw materials.

Example: Farming, mining, cutting down trees Changing raw materials or

natural resources into finished products.

Example: The sawmill turns trees into lumber.

Example: Making cereal or bread products out of corn, wheat, oats, etc…

Activities that handle goods that are ready to be sold to consumers.

Example: Stores, banks, companies

Example: Trucks and trains that move products to stores.

Activities and people that deal mostly with information instead of goods.

Example: Researchers, Administrators, Managers

GNP is the value of all goods and services that a country produces in a year. (How wealthy or poor a country is.)

GNP divided by the population. This shows individual purchasing power and is useful for comparing levels of economic development. (Standard of living.)

Countries that have strong Countries that have strong primary, secondary, tertiary, primary, secondary, tertiary, and quaternary industriesand quaternary industries

Countries that are moving Countries that are moving towards development. Most towards development. Most people work in primary people work in primary activities.activities.

Wealthy countries:Wealthy countries: United United States, Australia, Canada, States, Australia, Canada, Germany, France, U.K.Germany, France, U.K.

Poor countries:Poor countries: Most African Most African countries, several Asian countries, several Asian countries, several Latin countries, several Latin American countriesAmerican countries

Good: health care, Good: health care, technology, education, jobs, technology, education, jobs, and high literacy rate, etc…and high literacy rate, etc…

Poor: health care, education, Poor: health care, education, technology, high birth rate, technology, high birth rate, high population growth, etc…high population growth, etc…

• Countries organize their economies in different ways called economic systems.

• Most countries organize their economies by answering three basic questions:

1. What (and how many) goods and services will be produced?

2. How will these products be produced?

3. How will these products and wealth gained from their sale be distributed?

• There are three economic systems that most countries use. The main difference between them is the role the government plays in answering the above questions.

• People, as consumers, help determine what will be produced by buying or not buying certain products. (Supply and Demand)

• Privately owned companies and businesses base their production on the action of the consumers.

• Companies compete for consumers’ business, which drives the cost of products.

• The government plays a limited role by providing some goods and services such as highways, postal service, education, etc…

• The government also protects people against unfair business practices. (monopolies)

• Countries: United States and several Western Europe countries (France, U.K., Germany) Most developed countries.

• The government makes all economic decisions. (opposite of capitalism)

• The government owns and runs all major farms, factories, utilities, stores, companies.

• The government decides what (and how many) products will be made, wages, and the prices of products.

• Countries: Cuba and China

• Government owns and operates industries such as transportation, communications, banking, mining, steel, etc…

• People own and operate other industries such as stores and farms.

• Government believes every citizen is entitled to basic goods and services such as health care, child care, pensions, housing, etc… (Welfare States)

• Countries: Canada

• Economic decisions are based on customs and traditions:

• tribal laws, rituals, religious beliefs, habits developed by ancestors.

• Location: Parts of Africa, Asia, Latin America, Pacific Islands

Government is the institution through which a society makes and enforces its public policies and provides for its common needs.

• Transportation

• Health care

• Communications

• Postal Service

• National Parks

• Leadership

• Providing food

• Regulating money

Keep order within a society. Avoid chaos and crime.

Protects society from outside threat.

The central government makes laws and decisions for the entire country.

Countries: Japan, U.K.

The power in the government is divided between the central government and state governments.

Countries: U.S.

State governments hold all of the power and work together for defense or foreign affairs.

Example: The south U.S. during Civil War

• A leader or group hold all of the power and make all decisions.

• Most dictators use military force or political terror to gain and exercise power.

• People are not free to express opinions.

• Examples: Hitler, Hussein, Castro (Cuba)

• A leader that holds all of the power and makes all decisions.

• Inherit position by being born into the ruling family.

• Kings, queens, shahs, pharoahs

• Today most monarchs are symbolic and do not have the same powers.

• Saudi Arabia,

• U.K. (constitutional monarchy)

• People choose their leaders and have power to set government policy.

• United States