Journal Topic: All Grown Up

1. Journal Topic: All Grown Up Imagine you have graduated from high school and have moved out on your on. How much money do you think it will it take you to live for a month? How will this money be spent and why? What kind of work will you do to earn this money? (Use the RACE format, and create at least 5 or more complete sentences)

2. Economy in Africa

3. Standards 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. b. Explain how most countries have a mixed economy located on a continuum between pure market and pure command. c. Compare and contrast the economic systems in South Africa and Nigeria.

4. Essential Question(s) 1. What are the three basic economic questions all economies must answer? 2. What are the similarities and differences in the economies of South Africa and Nigeria?

5. Traditional Economy • Decisions are made based on customs & habits • Also called a subsistence economy • The people do not produce large quantities of surplus (extra) goods to sell in a market • The people do sometimes barter, which means they trade their goods for goods from other people.

6. Traditional Economy (continued)

7. Command Economy • Government planninggroups decide which goods and services should be produced, where produced, prices for goods, and job and wages for workers • Government owns most factories • Individualscannot start their own businesses

8. Command Economy (continued)

9. Market Economy • Individualsmake the decisions of what is produced, where it is produced, and what to buy • Also called: capitalism, free enterprise, or laissez-faire • Individuals may create their own businesses • Many of the countries in Africa have a Market Economy

10. Market Economy (continued)

11. Mixed Economy • Mix of traditional, command, and market economies • Government makes some decisions, but does allow for individuals to create businesses • Ex. Nearly all the countries in Africa have a mixed economy

12. Mixed Economy (continued)

14. Voluntary Trade • Key to a healthy market economy • When both parties in a transaction are able to gain something from the exchange • Encourages people and industrial planners to specialize in making items that the market is demanding a. Means production is more efficient and profitable

15. Voluntary Trade (continued)

16. Economic Specialization • Specialization: products a country makes best and are in demand in other countries; uses the product to gain products that are not available in their country • South Africa has rich mineral deposits, such as gold, diamonds & platinum • Nigeria has rich oil deposits a. However, it now has to import food to feed its growing population

17. Specialization (continued)

18. Specialization (continued)

19. Specialization (continued)

20. Economic Growth: Natural Resources 4. Diamonds a. Profits have helped improve African countries 1. DeBeers Company- largest business 2. trade has been well regulated b. Conflict Diamonds 1. stolen or smuggled diamonds have been sold for weapons for soldiers to aid in the civil wars and rebel groups

21. Specialization (continued)

22. OPEC Organization of Petroleum Exporting Countries (OPEC) a. Created in 1960 by countries with large oil supplies b. Nigeria c. Decides how much oil they will produce and that determines the price 1) Produce more and prices go down 2) Produce less and prices go up

23. Trade Barriersa/k/a Tariffs, Quotas & Embargos • Trade barriers:anything that slows down or prevents one country from exchanging goods with another country • Tariff:a tax placed on goods when they are brought into one country from another country • Protective tariff:a tax placed on goods coming from another country

24. Trade Barriers (continued) 4. Quota:a way of limiting the amount of foreign goods that can come into a country 5. Embargo:a trade barrier in which one country announces that it will no longer trade with another country in order to isolate that country and cause economic problems Ex: An embargo was placed on South Africa because of their policy of apartheid(the legal separation of races). The embargo lasted several years and ended in the 1990s.

25. Tariffs, Quotas & Embargos

26. Currency • Currency: money • Most countries have their own type of currency (money) • Has been hard for African countries to exchange currency because of the political and economic problems • CFA franc - currency created after World War II that is used by several countries. The value is linked to the French franc. The CFA is now also linked to the Euro, which is used in the European Union. a. West African CFA franc b. Central African CFA franc

28. Human Per Capita and GDP • Human capital: the knowledge and skills that make it possible for workers to earn a living producing goods or services (educating and training workers) A. Companies that invest in training and education generally earn more profits (money) • South Africa invested in human capital. The electronic and mining industries require trained workers in technology. • Nigeria does not invest heavily in human capital despite their wealth in oil.

29. Human Per Capita 2. Gross Domestic Product (GDP): total value of all goods and services produced within a year a. South Africahas a high GDP b. Nigeriahas no GDP • Per Capita -amount of goods and services divided by the population

31. Capital Goods • Capital goods:factories, machines, and technology that people use to make products to sell • Advanced technology in factories has increased production of goods • Increased production of goods leads to a higher Gross Domestic Product • South Africa: invested heavily in capital goods- mining, assembling automobiles & trucks, iron & steel • Nigeria: invested in capital goods - oil industry only. They have invested little in farming, which has led to their people depending on importing food, or the people will suffer from starvation.

32. Capital Goods (continued)

33. Economic Growth: Natural Resources • Uranium- element a. Essential part of nuclear weapons b. Fuel in nuclear power plants c. Determine age of artifacts d. Africa supplies 20% of the world’s uranium.

34. Economic Growth (continued)

35. Economic Growth: Natural Resources 2. Oil a. Found along the Mediterranean coast b. Sub-Saharan Africa has struggled due to corrupt politicians and businessmen. c. Found in Nigeria; however, the economy is unstable

36. Economic Growth (continued)

37. Economic Growth: Natural Resources 3. Gold a. 40% of the world’s gold is found in Africa b. Profits have been used to help improve the country and help the people c. Mines have bad working conditions, unsafe working conditions, and low pay

39. Economic Growth: Natural Resources • Diamonds • Profits have helped improve African countries • DeBeers Company – largest business • Trade has been well regulated • Conflict Diamonds 1. Stolen or smuggled diamonds have been sold for weapons for soldiers to aid in the civil warsand rebel groups

40. Entrepreneurs • Entrepreneur: creative, original thinkers, who are willing to take risks to create new businesses and/or products • Many African governments are encouraging new businesses to open.

42. Personal Money Management • Income:total of a person’s earning that they can use • Savings:money left over after buying what is needed and wanted • Budget:spending and savings plan • Investing:money in bank accounts, certificates of deposit or mutual funds used to save money for a later date • Financial Investment:investment of money into financial assets, such as bank accounts, certificate of deposits, stocks, bonds and mutual funds

45. Personal Money Management

47. Personal Money Management 6. Real (or Physical) Capital Investment purchase of equipment, physical plants and new homes by consumers 7. Credit:ability to borrow money a. car loans, mortgage (home) loans, credit cards b. extremely useful to the economy c. becomes a problem when people cannot pay the money borrowed back on time

48. Personal Money Management (continued)

49. Personal Money Management (continued)

50. Standards 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. b. Explain how most countries have a mixed economy located on a continuum between pure market and pure command. c. Compare and contrast the economic systems in South Africa and Nigeria.