Question

Read each vocabulary term and its definition. Write a sentence for each term that shows your understanding of its meaning.

Keep an eye out for each vocabulary term in your Student Book. Learn more about the meaning of each term there, and build your vocabulary knowledge and skills!

capital goods: the factories, machines, technology, tools, equipment, and any other human-made goods used to make other goods or services

command economy: an economic system based on government control and regulations

embargo: a ban on trade with a specific nation or group of nations

entrepreneurship: the activity of creating a new business

exchange rate: the ratio used to determine how much of one currency can be exchanged for an equal value of another currency

gross domestic product (GDP): the total market value of the goods and services produced by a country in a specific year

gross domestic product (GDP) per capita: the total market value of the goods and services produced by a country in a specific year divided by the population

human capital: the talents, skills, and labor of people that can be used to produce goods and services

literacy rate: the percentage of adults who can read and write

market economy: an economic system based on supply and demand, in which consumers and producers can buy and sell what they want

mixed economy: an economic system with elements of both market and command economies

natural resource: a naturally-made item, such as a tree, mineral, or fresh water, that people can use to help meet a need or want

opportunity cost: the value of what you have to give up in order to choose something else

revenue: money that a company, organization, or government receives from people

specialization: focusing on efficiently producing a limited number of goods and services

standard of living: the measure of a nation's quality of life based on income, education, life expectancy, and other factors

tariff: a tax that is placed on goods brought into one country from another

traditional economy: an economic system based on traditional customs and values

quota: a limit on the quantity of a good that can be imported

Answer 1

- capital goods: The bakery bought a new oven and mixing machines as capital goods to increase how many loaves it could bake each day.
- command economy: In a command economy, the government decides which factories open and what products they must make.
- embargo: The government announced an embargo, banning all trade with the neighboring country after diplomatic talks failed.
- entrepreneurship: Her entrepreneurship led her to start a delivery business that solved a gap in her town’s services.
- exchange rate: The exchange rate between dollars and pesos determines how many pesos you get when you exchange one dollar.
- gross domestic product (GDP): The country's GDP grew last year because factories produced more cars and service companies expanded.
- gross domestic product (GDP) per capita: Although Country X has a large GDP, its GDP per capita is low because the population is very large.
- human capital: Investing in training and education increases human capital by improving workers’ skills and productivity.
- literacy rate: A higher literacy rate means more adults in a country can read job applications and follow written instructions.
- market economy: In a market economy, farmers plant more of the crops that consumers are willing to pay for.
- mixed economy: A mixed economy allows private businesses to operate while the government provides public schools and regulates utilities.
- natural resource: Freshwater and timber are natural resources that farmers and builders use every day.
- opportunity cost: If you spend your savings on a new phone, the opportunity cost is the vacation you could have taken instead.
- revenue: The local museum’s revenue from ticket sales helps pay for new exhibits and maintenance.
- specialization: By specializing in making high-quality shoes, the small factory became more efficient and profitable.
- standard of living: Improvements in healthcare and higher wages raised the town’s standard of living over the last decade.
- tariff: The government placed a tariff on imported chocolate to protect its domestic confectioners.
- traditional economy: In the village’s traditional economy, families grow the same crops and trade them the way their grandparents did.
- quota: The country set a quota that limits how many foreign cars can be imported each year.