Chapter 3.3 Economic Systems of Latin America and Canada

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resources

Things people use. Natural, human, and capital are three different kinds.

Economics

The study of how people, businesses, and countries use limited resources

three basic economic questions

What to produce? How to produce? For whom to produce?

traditional economy

People use just what they need to survive, and they inherit their position from their parents. Economic system of many native peoples.

command economy

The government owns the means of production and most of the land. The government answers the three basic economic questions.

market economies

Allow for private ownership of businesses and land. Also known as a capitalist economy.

profit

The amount of money a business makes after it pays for all expenses.

expenses

Money that has to be paid for materials, labor, or other bills.

market

Wherever buyers and sellers exchange money and goods.

mixed economies

Has characteristics of both command and market economies. Almost all modern economic systems are this kind.

Canada's economy

It is a mixed economy; however, it is mostly a market economy. The governments controls some areas like health care.

Cuba's economy

Is mostly a command economy. The government owns all large industries and most land.

Brazil's economy

A mixed economy that leans toward free markets. Its GDP is the second highest in the Americas.

International Trade

Occurs when nations choose to exchange goods with one another. It is necessary because no nation can produce everything it wants or needs.

specialization

When a country chooses to produce what it is best at. It forces countries to participate in international trade because countries cannot produce everything they want or need.

imports

Goods a country buys from another country.

exports

Goods a country sells to another country.

trade barriers

Obstacles to trade. They make trade between two countries harder.

natural trade barriers

They are barriers because they are hard to cross and make it difficult for people in different communities to trade. Examples are mountains, deserts, and rain forests.

political trade barriers

Rules passed by governemtns to regulate trade. They are often intended to help a country's own producers be more competitive in the market place. Examples are tariffs, quotas, and embargos.

tariff

Taxes on imported goods. They raise prices on foreign imported goods, making locally made goods cheaper; therefore, they help local businesses.

quotas

The limit the amount of foreign goods that may be imported in a given amount of time.

embargo

When one nation refuses to trade with another nation.

North American Free Trade Agreement (NAFTA)

An agreement between the United States, Canada, and Mexico to remove all tariffs to increase trade between the three countries.

currency

Something that is assigned value. It can be used to buy goods and services in a market. It is usually called money.

exchange rate

What the currency of one nation is worth in another nation.

economic growth

Rate at which a country develops economically.

physical capital

Goods used to produce things, such as factories, machinery, and technology.

human capital

Investment in the welfare and training of human workers.

gross domestic product (GDP)

The value of all the goods a nation produces in a year.

entrepreneurs

People who start and own private businesses.

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