CRCT Economics Review Sheet Name: ______________________ Teacher: _______________ Period #: _______ What do I need to know about economics for the CRCT? Middle East: SS7E5 The student will analyze different economic systems. a. Compare how traditional, command, and market economies answer the economic questions of (1) what to produce, (2) how to produce, and (3) for whom to produce. Command Economy: In a command economy, the central authority (government) is in charge and makes all economic decisions. The most important aspect of this type of economy is that all major decisions related to the production, distribution, commodity and service prices, are all made by the government or central authority. What to produce – Whatever the government says to produce How to produce – However the government tells you to produce For whom to produce – For whomever the government tells you to produce (ideally the entire society) Market Economy: In a market economy, consumers are in charge and make economic decisions by spending money on goods and services they need/want. In a market economy, national and state governments play a minor role. Consumers and their buying decisions drive the economy. The assumptions of the market play a major role in deciding the right path for a country’s economic development. What to produce – Whatever consumers say to produce How to produce – However the consumers tell you to produce For whom to produce – For whomever the consumers tell you to produce Traditional Economy: In a traditional economy, things are done as they have been done in the past (traditionally). The economic system in which resources are allocated by inheritance, and which has a strong social network and is based on primitive methods and tools. It is strongly connected to subsistence farming. What to produce – Whatever ritual, habit or custom dictates How to produce – However ritual, habit or custom dictate For whom to produce – For whomever ritual, habit or custom dictate SS7E5 The student will analyze different economic systems. b. Explain how most countries have a mixed economy located on a continuum between pure market and pure command. Since no country has a pure command or pure market economic system, most economies combine aspects of both of these pure economic systems, albeit to different degrees. Real economies fall somewhere between the two extremes.
Transcript
CRCT Economics Review Sheet
Name: ______________________ Teacher: _______________ Period #: _______
What do I need to know about economics for the CRCT?
Middle East:
SS7E5 The student will analyze different economic systems. a. Compare how traditional, command, and market economies answer the economic
questions of (1) what to produce, (2) how to produce, and (3) for whom to produce.
Command Economy: In a command economy, the central authority (government) is in
charge and makes all economic decisions. The most important aspect of this type of
economy is that all major decisions related to the production, distribution, commodity and
service prices, are all made by the government or central authority.
What to produce – Whatever the government says to produce
How to produce – However the government tells you to produce
For whom to produce – For whomever the government tells you to produce
(ideally the entire society)
Market Economy: In a market economy, consumers are in charge and make economic
decisions by spending money on goods and services they need/want. In a market economy,
national and state governments play a minor role. Consumers and their buying decisions
drive the economy. The assumptions of the market play a major role in deciding the right
path for a country’s economic development.
What to produce – Whatever consumers say to produce
How to produce – However the consumers tell you to produce
For whom to produce – For whomever the consumers tell you to produce
Traditional Economy: In a traditional economy, things are done as they have been done in
the past (traditionally). The economic system in which resources are allocated by
inheritance, and which has a strong social network and is based on primitive methods and
tools. It is strongly connected to subsistence farming.
What to produce – Whatever ritual, habit or custom dictates
How to produce – However ritual, habit or custom dictate
For whom to produce – For whomever ritual, habit or custom dictate
SS7E5 The student will analyze different economic systems. b. Explain how most countries have a mixed economy located on a continuum
between pure market and pure command.
Since no country has a pure command or pure market economic system, most economies
combine aspects of both of these pure economic systems, albeit to different degrees. Real
economies fall somewhere between the two extremes.
What is a mixed economy? A mixed economy blends components of two or more of the
following economic systems to varying degrees: traditional, market, and command
Most countries have a Mixed Economy. However, a Mixed Economy is not an economic
system but rather a blending of two different types of systems.
SS7E5 The student will analyze different economic systems. c. Compare and contrast the economic systems in Israel, Saudi Arabia, and Turkey.
Israel
(1) What to produce?
A large portion 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 privatizing
companies.
(3) For whom to produce?
The private sector produces goods and services for domestic and international
markets based on the market price system.
Economic
Systems
Pure
Market
Pure
Command
Israel
68%
Place on the continuum: Israel would fall slightly
to the market side of center on the continuum.
Place on the continuum: Israel would fall slightly to the market side of center on the
continuum (you do NOT need to memorize the exact number)
Saudi Arabia
(1) What to produce?
Saudi Arabia is the world’s leading producer of oil. The Saudi government continues
to invest in industrial production. They are a leader in petrochemicals, mining, and
refining.
(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 involvement.
Saudi Arabia relies heavily on specialized labor from other countries. Estimates are
that a third of the labor force falls in this category.
Since the 1980s, the Saudi government has been trying to increase private ownership
of business and encourage more joint ventures with private foreign companies.
(3) 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.)
Economic
Systems
Pure
Market
Pure
Command
Saudi
Arabia
64%
Place on the continuum: Saudi Arabia would fall
to the command side of center on the continuum.
Place on the continuum: Saudi Arabia would fall to the command side of center on the
continuum.
Turkey
(1) What to produce?
Turkey has a diversified economy with large service, manufacturing, and agricultural
sectors.
(2) How to produce?
Since the late 1980s, Turkey has gradually moved from a government directed
economy to more private enterprise.
(3) For whom to produce?
One fifth of Turkey’s production is exported. The remainder is consumed by
domestic consumers and the government.
Economic
Systems
Pure
Market
Pure
Command
Turkey
62%
Saudi
Arabia
64%
Israel
68%
Place on the continuum: Turkey would fall to the left of Saudi Arabia and Israel on the
market side of the continuum.
SS7E6 The student will explain how voluntary trade benefits buyers and sellers
in Southwest Asia (Middle East). a. Explain how specialization encourages trade between countries.
“Do what you do best; trade for the rest.” Specialization - Specialization occurs when one nation can produce a good or service at a
lower opportunity cost than another nation. Specialization encourages trade and can be a
positive factor in a country’s economy. For example, if a country specializes in oil, they can
trade oil for a certain food that another country specializes in so that both countries benefit.
Over-Specialization – Examples of over-specialization include one-crop economies and
generally having a lack of diversification. This can negatively impact a region’s economy.
What if a country over-specializes in oil and then runs out of oil? What if a country over-
specializes in corn and then a scientific study comes out that says corn causes cancer? If
something happens to the one crop or resource a country relies on then the country’s entire
economy could potentially collapse.
SS7E6 The student will explain how voluntary trade benefits buyers and sellers
in Southwest Asia (Middle East). b. Compare and contrast different types of trade barriers, such as tariffs, quotas, and
embargos.
Tariff – A tariff is a tax placed on goods that one nation imports from another.
• Many nations use tariffs to protect their industries from foreign competition.
• Tariffs provide protection by acting to raise the price of imported goods.
• Thus, tariffs encourage domestic firms to increase their production, and consumers
are forced to pay higher prices for the protected goods.
Can you think of an example? __________________________________________________
SS7E6 The student will explain how voluntary trade benefits buyers and sellers
in Southwest Asia (Middle East). c. Explain the primary function of the Organization of Petroleum Exporting Countries
(OPEC).
OPEC – OPEC stands for the Organization of Petroleum Exporting Countries. The role of
this organization is to influence the price of oil on world markets. If OPEC wants the price
of oil to increase on world markets, they will slow production of oil. If OPEC wants the
price of oil to decrease on world markets, they will increase production of oil.
You do not need to know all of the members of OPEC however you do need to know that
not all oil producing nations are OPEC members, nor are all OPEC members Middle
Eastern countries.
SS7E6 The student will explain how voluntary trade benefits buyers and sellers
in Southwest Asia (Middle East). d. Explain why international trade requires a system for exchanging currencies
between nations.
You DO NOT need to know types of currency (money) or how to calculate exchange rates
for the CRCT.
Exchange Rates - exchange rates provide a procedure for determining the value of one
country’s currency in terms of another country’s currency. Without a system for exchanging
currencies, it would be very difficult to conduct international trade.
• Before people from different countries can buy or sell anything to each other, they
have to solve a basic problem.
• Buyers have to be able to change their money from their country's currency to the
seller's national currency. This is called "foreign exchange."
• Each currency, whether it's the US dollar or the Haitian gourde, has a value in terms
of other currencies. This is the "exchange rate."
• Without a reliable supply of foreign exchange in each country, and without relatively
stable exchange rates, world trade would drop drastically.
SS7E7 The student will describe factors that influence economic growth and
examine their presence or absence in Israel, Saudi Arabia, and Iran.
There are four factors that most influence economic growth in a nation. These are:
1.) Land - Land provides the basic raw materials--vegetation, animals, minerals, fossil
fuels--that are inputs into the production of goods (natural resources).
2.) Labor - Labor is the resource that does the "hands on" work of transforming raw
materials into goods.
3.) Capital (2 kinds; human and physical – defined below)
4.) Entrepreneurship – defined below
You need to be able to describe these factors and explain how the presence or absence of
them has influenced economic growth in the Middle East.
You also need to know that economic growth is usually measured by calculating the percent
increase in GDP from one year to the next. This is known as the GDP Growth Rate.
SS7E7 The student will describe factors that influence economic growth and
examine their presence or absence in Israel, Saudi Arabia, and Iran. a. Explain the relationship between investment in human capital (education and
training) and gross domestic product (GDP).
Human Capital - education and training of workers whether formal or on-the-job
Gross Domestic Product – The total value of all goods and services produced within a
country in a year.
Human capital influences GDP – The education and training level of the workforce in the
Middle East impacts economic growth. This relationship can be seen by comparing the
literacy rate (the ability to read and write at a competent level) and GDP of countries. If the
literacy rate is growing quickly, is GDP growing at a fast rate also?
By looking at this information, you will be able to see that there is a relationship between the
literacy rate and a nation’s ability to produce income.
**One important thing to remember here is that highly developed economies like the USA
and Israel have smaller growth rates because the size of these economies are already so large.
Israel Literacy Rate— 96.9%
Real economic growth rate (2007): 4.8%
(Real economic growth rate is the percent the GDP increased over the previous year after
taking into consideration inflation or deflation)
Israel’s literacy rate is up from 85% in 1980.
Saudi Arabia Literacy Rate— 78.8%
Real economic growth rate (2007): 6.1%
Saudi Arabia’s literacy rate is up from 48.5% in 1980.
Saudi Arabia has implemented a five year plan, lasting from 2005 to 2010, to increase
education services to native Saudis, including women. The Saudi government has invested
large amounts of public funds into building colleges and universities for the native
population. This is part of a move toward scaling back the international worker presence in
the Kingdom and making more jobs available to Saudi citizens.
Iran Literacy Rate— 79%
Real economic growth rate (2007): 6.2%
Iran’s literacy rate is up from 50% in 1980.
SS7E7 The student will describe factors that influence economic growth and
examine their presence or absence in Israel, Saudi Arabia, and Iran. b. Explain the relationship between investment in capital (factories, machinery, and
technology) and gross domestic product (GDP).
Capital - Capital is the comprehensive term for the vast array of tools, equipment, buildings,
and vehicles used in production.
Gross Domestic Product – The total value of all goods and services produced within a
country in a year.
Capital influences GDP – When a country invests in capital, tends to produce increased
GDP, hence the real economic growth rate would be expected to increase with increased
capital investment.
The below figures show the investment in capital as a percentage of the country’s GDP.
Israel Capital Investment—18% of GDP
Real growth rate: 4.8%
Saudi Arabia Capital Investment—19.5% of GDP
Real growth rate (2007): 6.1%
Iran Capital Investment—27.7% of GDP
Real growth rate (2007): 6.2%
SS7E7 The student will describe factors that influence economic growth and
examine their presence or absence in Israel, Saudi Arabia, and Iran. c. Explain the role of oil in these countries’ economies.
In order to do this, you must:
1.) identify whether or not a country has access to oil fields.
2.) If a country does have oil fields, determine the percentage of GDP that results from
the production of oil in that country.
3.) You can then compare GDPs of the selected countries and determine the impact of
the presence of absence of oil on GDP.
On the CRCT you need to be able to explain how the presence or absence of oil affects
economic development. You may have to examine charts or graphs to determine this on the
CRCT.
Israel GDP— $170.3 billion (2008 est.)
Oil – No significant proven reserves.
Saudi Arabia GDP— $527 billion (2008 est.)
Oil – Largest producer and exporter of oil in the world. Approximately 90% of government
revenues come from the oil industry.
Iran GDP— $852.6 billion (2008 est.)
Oil – The economy relies primarily on the oil industry. Over 85% of government revenues
come from this sector. Over 80% of exports are petroleum and petroleum products.
SS7E7 The student will describe factors that influence economic growth and
examine their presence or absence in Israel, Saudi Arabia, and Iran. d. Describe the role of entrepreneurship.
Entrepreneurship – Entrepreneurship is the resource that undertakes the risk of bringing the
other resources together and initiating the production process. An entrepreneur is a person
who risks their own money to try to start a business.
Entrepreneurship impacts economic development – When a country is open to
entrepreneurship, that country’s economy will grow faster.
Entrepreneurship can be compared between countries by looking at their Business Freedom
scores from the Economic Freedom Index (EFI).
Israel (66.1) Based on information from the Economic Freedom Index (EFI), Israel is moderately open to
entrepreneurship. It is relatively easy to start a business, but it takes longer than the world
average. Private property rights are well protected by law. Foreign investment is encouraged,
but is limited in some sectors.
Saudi Arabia (86.1) Based on information from the Economic Freedom Index (EFI), Saudi Arabia is increasingly
open to entrepreneurship. The government makes opening, operating, and closing a business
easy compared to the world average. There is good protection of private property rights and
foreign investment is encouraged, although some investors must have Saudi citizens as
partners to operate legally.
Iran (69.4) Based on information from the Economic Freedom Index (EFI), Iran is not very open to
entrepreneurship. The economy of Iran is highly centralized and regulations make it difficult
for individuals to open, operate, and close businesses. There is little protection of private
property rights, and the government allows very little foreign direct investment.
SS7G8 The student will describe the diverse cultures of the people who live in
Southwest Asia (Middle East). e. Evaluate how the literacy rate affects the standard of living.
There is a relationship between literacy and standard of living in a country. Generally
speaking, the higher the literacy rate in a country, the higher the standard of living.
For Example:
Yemen:
Literacy Rate – 50.2%
GDP per Capita - $2,600
Life Expectancy – 63.25
Unemployment Rate – 35%
Lebanon:
Literacy Rate – 87.4%
GDP per Capita - $11,100
Life Expectancy – 73.66
Unemployment Rate – 9.2%
Africa: (Much of the foundation information above is repeated for Africa and
Asia so it has been omitted. Please refer to the Middle East section for the foundation
information.)
SS7E1 The student will analyze different economic systems. a. Compare how traditional, command, and market economies answer the economic
questions of (1) what to produce, (2) how to produce, and (3) for whom to produce.
SS7E1 The student will analyze different economic systems. b. Explain how most countries have a mixed economy located on a continuum
between pure market and pure command.
For this Georgia Performance Standard, elements “a” and “b” are discussed in the Middle
East section above. Please see this section to review this information.
SS7E1 The student will analyze different economic systems. c. Compare and contrast the economic systems in South Africa and Nigeria.
South Africa (1) What to produce?
A large portion of South Africa’s GDP comes from a highly developed, privatized
enterprise system rivaling many other developed economies. The private sector is
based on mining, agriculture, services, and manufacturing.
Due to large inequities established by apartheid era policies, the South African
government operates a relatively large social services sector and maintains state-run
enterprises in the areas of housing, business development, education, basic services,
and healthcare.
(2) How to produce?
In the developed sector, private businesses and consumers make production decisions
based on market principles and international economic standards.
The Reconstruction and Development Plan designed as a blueprint for providing
social services is administered by a number of government ministries.
(3) For whom to produce?
The private sector produces goods and services for domestic and international
markets based on the market price system.
The government social services sector produces public goods and services based
upon the needs of the population throughout the country.
Place on the continuum: South Africa is a strong market economy with some command
characteristics.
Nigeria
(1) What to produce?
Nigeria’s major industry is petroleum production. This is followed by agriculture.
Business development is difficult because of corruption and ineffective government
oversight of markets.
It is estimated that as much as 75% of Nigeria’s economy occurs in the informal
sector and it not counted in GDP.
(2) How to produce?
After years of government control, the country’s major industries are increasingly
becoming privatized. This includes the petroleum industry and banking sector.
Corruption, high tariffs on imported goods, and lack of infrastructure cause
production inefficiencies.
(3) For whom to produce?
46% of Nigeria’s daily oil production is exported to the United States.
Due to an overvalued currency, Nigerians import many consumer goods. Many
domestic manufacturers have been unable to compete with cheap imports and have
closed.
Place on the continuum: Nigeria is on the market side of the continuum, but is more toward
the command end than South Africa.
Economic
Systems
Pure
Market
Pure
Command
Nigeria
55%
South Africa
64%
SS7E2 The student will explain how voluntary trade benefits buyers and sellers
in Africa. a. Explain how specialization encourages trade between countries. Compare and
contrast different types of trade barriers, such as tariffs, quotas, and embargos.
SS7E2 The student will explain how voluntary trade benefits buyers and sellers
in Africa. b. Explain why international trade requires a system for exchanging currencies
between nations.
For this Georgia Performance Standard, elements “a” and “b” are discussed in the Middle
East section above. Please see this section to review this information.
SS7E3 The student will describe factors that influence economic growth and
examine their presence or absence in Nigeria and South Africa. a. Explain the relationship between investment in human capital (education and
training) and gross domestic product (GDP).
When a country invests in improving their human capital, it results in economic growth and
improved GDP. **It important to remember that highly developed economies like the USA
and South Africa have smaller growth rates because the size of these economies is already so
large. Statistics do not need to be memorized but rather are used to illustrate examples of this
concept.
South Africa**
Years compulsory— Children ages 7 – 15 must attend school.
Literacy Rate— 86.4%
Real growth rate (2007): 2.5%
South Africa’s literacy rate is up from 76% in 1980.
Nigeria
Years compulsory—No compulsory education
Literacy Rate— est. between 39 – 51%
Real growth rate (2006-2007): 5.9% (growth based on oil exports)
Nigeria’s literacy rate is up from 33.5% in 1980.
SS7E3 The student will describe factors that influence economic growth and
examine their presence or absence in Nigeria and South Africa. b. Explain the relationship between investment in capital (factories, machinery, and
technology) and gross domestic product (GDP).
Again, you do not need to memorize statistics but rather understand that when a country
invests in improving a nation's capital resources it results in economic growth and improved
GDP. Here are some examples:
South Africa
Capital Investment—20.1% of GDP
Real growth rate (2006-2007): 2.5%
Nigeria
Capital Investment—40.2% of GDP
Real growth rate (2007): 21.4%
For this Georgia Performance Standard, elements “a” and “b” are discussed in the Middle
East section above. Please see this section to review this information.
SS7E3 The student will describe factors that influence economic growth and
examine their presence or absence in Nigeria and South Africa. c. Explain how the distribution of diamonds, gold, uranium, and oil affects the
economic development of Africa.
Again, you do not need to memorize statistics but rather be able to explain how the presence
or absence of natural resources impacts a country’s economy. Here are some examples:
South Africa
GDP— $506.1 billion (2008 est.)
Resources – World’s largest producer of Gold; No significant oil production; Produces
diamonds; No significant uranium production
Nigeria
GDP— $328.1 billion (2008 est.)
Resources – Oil and natural gas production account for 37% of GDP; Not a major producer
of uranium, diamonds, or gold.
SS7E3 The student will describe factors that influence economic growth and
examine their presence or absence in Nigeria and South Africa. d. Describe the role of entrepreneurship.
South Africa (72.3) Based on information from the Economic Freedom Index (EFI), South Africa is very open to
entrepreneurship. It is easy to start a business. Private property rights are well protected by
law, but the courts are slow and inefficient, making it difficult to resolve disputes.
Nigeria (51.6) Based on information from the Economic Freedom Index (EFI), Nigeria is moderately open
to entrepreneurship. In theory, it is easy to start a business, but in practice, government
corruption makes it very hard to obtain an official business license. Another difficulty for
business owners is lack of protection of private property rights. Much of the entrepreneurship
takes place in the informal sector of the economy.
SS7G4 The student will describe the diverse cultures of the people who live in
Africa. c. Evaluate how the literacy rate affects the standard of living.
You should not memorize literacy rates but rather understand the idea that the higher the
literacy rate of a country the higher the citizens standard of living will be. If a country
improves their literacy rate, they will also improve the standard of living.
For example (These are just a few factors to help gauge standard of living):
South Africa:
Literacy Rate – 86.4%
GDP per Capita - $10,400
Life Expectancy – 48.58
Unemployment Rate – 21.7%
Cote d’Ivoire:
Literacy Rate – 48.7%
GDP per Capita - $1,700
Life Expectancy – 55.58
Unemployment Rate – 45%
ASIA:
SS7E8 The student will analyze different economic systems. a. Compare how traditional, command, market economies answer the economic
questions of (1) what to produce, (2) how to produce, and (3) for whom to produce.
b. Explain how most countries have a mixed economy located on a continuum
between pure market and pure command.
For this Georgia Performance Standard, elements “a” and “b” are discussed in the Middle
East section above. Please see this section to review this information.
SS7E8 The student will analyze different economic systems. c. Compare and contrast the economic systems in China, India, Japan, and North
Korea.
China (1) What to produce?
40 % of the Chinese economy is still based in state-run industries
60% of the economy is based on the private sector in where producers and consumers
make production decisions
(2) How to produce?
The many inefficiencies found in the state-run industries, particularly in the area of
agriculture, limit China’s growth.
In the private market, the speed of economic growth has caused Chinese officials to
have increasing difficulty monitoring consumer safety and environmental pollution.
(3) For whom to produce?
China requires food production to meet self-sufficiency level for the nation and only
the surplus may be exported. In reality, there is not enough proper storage of food to
meet the self-sufficiency requirement.
China exports a large amount of manufactured goods. However, the expanding
middle class in China is seen as a growth market for both Chinese and foreign
companies.
Place on the continuum: China is slightly on the market side of center on the continuum.
India (1) What to produce?
Since 1991, India has slowly allowed the markets to open up to private sector
domestic and foreign businesses.
The majority of the population relies on subsistence agriculture as a means of
survival.
There is a lot of bureaucracy and corruption involved in setting up and operating
business.
(2) How to produce?
India is increasing its oversight of intellectual and private property rights, but legal
challenges are fraught with bureaucracy.
India has an increasingly educated workforce particularly in areas of engineering and
computer science.
A complex, corrupt, and hefty tax system can sometimes make operating a business
in India difficult.
(3) For whom to produce?
Food production is largely for domestic consumers with many citizens producing
food mainly for their own family consumption.
The software and business process outsourcing industries are rapidly expanding
export markets for private Indian companies.
Place on the continuum: India would be more to the market side of the continuum than
China.
Japan (1) What to produce?
Japan’s economy is primarily market driven with supply and demand determining
what will be produced.
The few industries that are highly government-controlled, such as agriculture, have
much lower productivity rates than those industries controlled by market forces.
(2) How to produce?
Private businesses determine their own production processes in most of the economy.
(3) For whom to produce?
Japan’s population enjoys a high standard of living and creates a strong domestic
market for goods and services.
The efficiency of Japan’s production and its reputation for quality products/services
has made it a major exporter.
Place on the continuum: Out of all four countries in this element, Japan would be the closest
to the market side of the continuum.
North Korea (1) What to produce?
Although there have been some small market reforms recently, the majority of legal
economic activities are centrally controlled by the government.
Due to natural disaster and inefficient government-run industries, North Korea is a
major recipient of food and basic service aid from Non-Governmental Organizations
(NGO) and foreign nations. The U.S. provides the people of North Korea with a large
amount of aid.
Like in many highly centralized economies, there is a large underground economy
that runs on a more market based system.
(2) How to produce?
Production decisions and methods are primarily determined by the government.
(3) For whom to produce?
Approximately one fourth of all domestic output is devoted to maintaining the
military. This severely limits the amount of goods and services that make it to the rest
of the people of North Korea.
North Korea produces natural resources and manufactured goods for export.
Place on the continuum: North Korea would be much more to the command side of the
continuum than any of the other nations discussed. One of the most command economies in
the world today.
Economic
Systems
Pure
Market
Pure
Command
North Korea
2%
India
54%
Japan
73%
China
53%
SS7E9 The student will explain how voluntary trade benefits buyers and sellers
in Southern and Eastern Asia. a. Explain how specialization encourages trade between countries.
b. Compare and contrast different types of trade barriers, such as tariffs, quotas, and
embargos.
c. Explain why international trade requires a system for exchanging currencies
between nations.
For this Georgia Performance Standard, elements “a”, “b”, and “c” are discussed in the
Middle East section above. Please see this section to review this information.
SS7E10 The student will describe factors that influence economic growth and
examine their presence or absence in India, China, and Japan. a. Explain the relationship between investment in human capital (education and
training) and gross domestic product (GDP).
When a country invests in improving their human capital, it results in economic growth and
improved GDP. **It important to remember that highly developed economies like the USA
and Japan have smaller growth rates because the size of these economies are already so large.
Japan has the second largest economy in the world. Statistics do not need to be memorized
but rather are used to illustrate examples of this concept.
India Years compulsory—No compulsory education
Literacy Rate— 64.84%
Real growth rate (2006-2007): 9.4%
China Years compulsory—Up to Grade 9
Literacy Rate— 90.9%
Real growth rate (2007): 11.4%
Japan** Years compulsory— Up to Grade 9 (only 4% leave school after this grade)
Literacy Rate— 99%
Real growth rate (2007): 2.5%
SS7E10 The student will describe factors that influence economic growth and
examine their presence or absence in India, China, and Japan. b. Explain the relationship between investment in capital (factories, machinery, and
technology) and gross domestic product (GDP).
Again, you do not need to memorize statistics but rather understand that when a country
invests in improving a nation's capital resources it results in economic growth and improved
GDP. Here are some examples:
India Capital Investment—39% of GDP
Real growth rate (2006-2007): 9.4%
China Capital Investment—40.2% of GDP
Real growth rate (2007): 11.4%
Japan** Capital Investment—22.5% of GDP
Real growth rate (2007): 2.5%
SS7E10 The student will describe factors that influence economic growth and
examine their presence or absence in India, China, and Japan. c. Describe the role of natural resources in a country’s economy.
Again, you do not need to memorize statistics but rather be able to explain how the presence
or absence of natural resources impacts a country’s economy. There are no more examples
for this section but you should know that:
Japan is a great example of a country with few natural resources that has developed systems
of production and trade that are so efficient that they have been able to develop one of the
best economies in the world.
It is worth noting that Japan does not have to maintain a large military like other nations.
SS7E10 The student will describe factors that influence economic growth and
examine their presence or absence in India, China, and Japan. d. Describe the role of entrepreneurship.
India (36.9) Based on information from the Economic Freedom Index (EFI), India is not very open to
entrepreneurship. Potential entrepreneurs face severe challenges. The regulatory framework
is burdensome, and the legal framework is weak. It can take almost 200 days to obtain a
construction permit.
China (49.8) Based on information from the Economic Freedom Index (EFI), China is not very open to
entrepreneurship. The government has allowed some business freedom, but the overall
regulatory framework lacks transparency and remains complex, arbitrary (random), and
unevenly implemented. Enforcement of regulations can be ineffective, hampered by petty
corruption and bureaucracy (frustrating rules).
Japan (83.8) Based on information from the Economic Freedom Index (EFI), Japan is very open to
entrepreneurship. The process for establishing and running a business is relatively
streamlined (efficient). However, bureaucracy is sometimes stifling, and entrepreneurial
growth is discouraged by structural problems caused by government interference in the
private economy.
You should be able to answer questions such as these:
How has entrepreneurship aided development in India, China, and Japan?
If there is a lack of entrepreneurship, how has this affected development in these regions?
SS7G12 The student will analyze the diverse cultures of the people who live in
Southern and Eastern Asia. c. Evaluate how the literacy rate affects the standard of living.
You should not memorize literacy rates but rather understand the idea that the higher the
literacy rate of a country the higher the citizens standard of living will be. If a country
improves their literacy rate, they will also improve the standard of living.
For example (These are just a few factors to help gauge standard of living):
![Mixed Economy [ECO101]](https://static.documents.pub/doc/80x56/58a04ae41a28ab39648b5ea5/mixed-economy-eco101.jpg)
