European Economics Study Guide

1.  What is the purpose of the European Union? To encourage trade within Europe and give the EU members more trading power; create a peaceful, stable Europe; assist each other in social and environmental issues

2.  What are some advantages (benefits) members of the EU received because of the formation of the European Union? More trading power; no tariffs for member nations; higher standard of living; no restrictions on travel/work for citizens of member nations

3.  What is the currency used by most EU members? euro

4.  Why do countries sometimes set up trade barriers? to encourage people to buy goods produced in their home country by making foreign made foods more expensive or not available at all

5.  What is a trade embargo? when a country refuses to trade with another country

6.  What is the GDP of a country? the total value of goods and services produced in a country in a year

7.  How can a country raise its GDP? Invest in human capital and physical capital

8.  How does the use of a common currency make trade less expensive? people don't have to pay fees to exchange the currency from one type to another

9.  Which type of trade barrier involves a limit on goods brought into a country? a quota

10. What is an example of an investment in human capital? education or training

11. How did the lack of investment in physical capital hurt the economy of Russia? Factories and buildings needed repair; factory equipment and technology were out of date

12. What natural resource of the United Kingdom was once plentiful but is almost used up today? coal

13. How can the abundance of natural resources help a country economically? It costs money to buy natural resources from other countries

14. What two natural resources does Russia have that have helped many Russians become wealthy? oil and natural gas

15. What is an entrepreneur? person who takes a risk to start a business

16. How do entrepreneurs help increase a country’s GDP? Creating businesses that give people jobs; taxes paid on items goes to the government; products are traded

17. What are the three basic economic questions each country must answer? What goods and services should be produced? How will goods and services be produced? Who will consume the goods and services?

18. How is a command economy different than a market economy? In a command economy the government makes the economic decisions but in a market the decisions are made by the consumers and producers

19. Where is the United Kingdom on the “types of economies” continuum compared to Russia? the UK is much closer to the market end of the continuum while Russia is closer to the command end of the continuum

20. Who makes the economic decisions in a market economy? producers and consumers

21. Who controls what is being produced in a command economy? the government

22. What type of economy do communist countries have? command

***Be able to compare the type of economies of Russia, Germany, and the United Kingdom (study chart in your notebook)

***Know all vocabulary words and how to use them in sentences