NOVI HISTORY

Every society must deal with providing goods and services for its people and must also develop an economic system that can decide how to use the limited resources of that society. Three basic questions must be answered: what goods and services will be produced, how will they be produced and who uses the goods and services that are produced?Several different types of economies can be found throughout Southwest Asia.

• In a traditional economy most of the economic decisions that are made are based on custom and on the habit of how such decisions were made in the past.

• In a command economy government planning groups make most of the basic economic decisions for the workers. Iran is an examble of this.  

• The third basic type ofeconomic system is a market economy. Here, society's economic decisions are made by individuals who decide what to produce and what to buy.

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Nearly all modern economies in the world today have characteristics of both the market and command economic systems. This is known as a mixed economy. Some examples are as follows: 

•  Israel has built an economy based on advanced technology that has allowed them to make up for much of what they lack in farm land and natural resources. 

• The King of Saudi Arabia and his advisers make most of the decisions about how and where to use oil profits, but they have invested a lot of the nation's wealth in technologies that allow them to produce goods they would not be able to do otherwise in the desert climate.

• Turkey's government has controlled the telephone and television industries. However in recent times the government has been loosening its hold on these key businesses.

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Many countries produce specialization products that are demand on the world market. This  is a way to build a profitable economy and to earn money to buy items that cannot be made locally. However, there are times when trade barriers prevent one country from exchanging goods with another. A tariff is a tax placed on goods when they are brought into a country. Depending on the tax amount, this can significantly raise prices which can drive down demand. Quota is a different way of limiting the amount of foreign goods that can come into a country. A quota sets the specific amount of a particular product that can be imported or acquired in a given period. . An embargo is when one country announces that it will no longer traid with another country. This tactic is used  in order to isolate the country and cause problem with that country's economy.

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Some other important economic terminology is as follows: 

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• Human capital means the knowledge and skills that make it possible for workers to earn a living producing goods and services.

• Capital goods are  the factors machines and technology that people used to make other goods and are important to economic growth. 

• Natural resources are the raw materials the country has that allow for the production of goods. Lan, water, forests, rich soil and minerals are all types of natural resources.

• Entrepreneurs are creative thinkers who are willing  to take risks to create new businesses and products.