Presentation on theme: "Splash Screen. Chapter Menu Chapter Introduction Section 1:Section 1:Economic Systems Section 2:Section 2:Characteristics of the American Economy Section."— Presentation transcript:
Chapter Menu Chapter Introduction Section 1:Section 1:Economic Systems Section 2:Section 2:Characteristics of the American Economy Section 3:Section 3:The Goals of the Nation Section 4:Section 4:Socialism and Capitalism Visual Summary
Chapter Intro 1 Every society has an economic system to allocate goods and services.
Chapter Intro 2 As an American, you have many economic choices available to you. Not all nations offer their citizens the same economic choices that most Americans enjoy. In this chapter, read to learn how the American economy is different from the economies of some other countries.
Section 1-Main Idea Section Preview In this section, you will learn about the four basic types of economic systems and how each one answers the three basic questions of what, how, and for whom to produce.
Section 1-Key Terms economic system traditional economy command economy market economy market circular flow of income and output mixed economy Content Vocabulary
Section 1-Key Terms available distribute incentive Academic Vocabulary
A.A B.B C.C Section 1-Polling Question Do you know much about the different economic systems that exist? A.A good amount of information B.A moderate amount of information C.Not a lot of information
Section 1 Three Basic Questions All economic systems face the same basic questions: What should be produced? How should it be produced? For whom should it be produced?
Section 1 Three Basic Questions (cont.) The way a nation uses its resources to satisfy its people’s needs and wants is called an economic system.economic system
Section 1 Three Basic Questions (cont.) –How should they be produced? Decisions must be made as to what the best combination of available inputs will be to get the job done for the lowest possible cost. An economic system must ask three basic questions: –What goods and services should be produced? If more of one particular item is produced, then less of something else will be produced.
Section 1 Three Basic Questions (cont.) –For whom should it be produced? The type of economic system under which people live determines how the goods and services will be distributed among its members.
A.A B.B C.C Section 1 Deciding how many laborers to hire falls under which question? A.What goods and services should be produced? B.How should they be produced? C.Who should share in what is produced?
Section 1 Types of Economic Systems There are four basic types of economic systems: traditional, command, market, and mixed.
Section 1 Types of Economic Systems (cont.) Economists have identified four theoretical types of economic systems. The traditional economy system makes decisions based on customs and beliefs that have been handed down from generation to generation.traditional economy
Section 1 Types of Economic Systems (cont.) Advantages: –You know what is expected of you. –Family and community ties are strong.
Section 1 Types of Economic Systems (cont.) Disadvantages: –Change is discouraged and perhaps punished. –Methods of production are often inefficient. –Choices among consumer goods are rare. –Individuals rarely experience an increased level of material well-being.
Section 1 Types of Economic Systems (cont.) In a command economy (or controlled) system, government leaders control the factors of production and make all decisions about their use.command economy (or controlled)
Section 1 Types of Economic Systems (cont.) Disadvantages: –Lack of incentives to work hard or show inventiveness. –Lack of consumer choices.
Section 1 Types of Economic Systems (cont.) In a market economy (or capitalist) system, individuals own the factors of production and make economic choices based on market price while looking out for their own and their families’ best interests.market economy (or capitalist) A market is the voluntary exchange of goods and services between buyers and sellers.market Prices in a market coordinate the interaction between buyers and sellers.
Section 1 Types of Economic Systems (cont.) The flow of resources, goods and services, and income in a market system is a circular flow of income and output. circular flow of income and output View: Circular Flow of Income and OutputCircular Flow of Income and Output
Section 1 Types of Economic Systems (cont.) Advantages: –People have freedoms. –Competition provides consumers with a wide array of goods and services to choose. –There is an efficient system of determining costs.
Section 1 Types of Economic Systems (cont.) Disadvantages: –Lack of concern about those too young, too old, or too sick to work.
Section 1 Types of Economic Systems (cont.) A mixed economy system combines characteristics of more than one type of economy.mixed economy Most countries have a mixed economy in which private ownership of property and individual decision making are combined with government intervention and regulations.
A.A B.B C.C D.D Section 1 In which type of system would you be “guided” into a career by a group of central planners? A.Traditional B.Command C.Market D.Mixed
Section 2-Main Idea Section Preview In this section, you will learn about the major characteristics of a market economic system.
A.A B.B C.C Section 2-Polling Question How much does advertising affect you? A.A lot B.A little C.Not at all
Section 2 Limited Role of Government Under capitalism, government plays a relatively limited role in the allocation of resources.
Section 2 Limited Role of Government (cont.) Capitalism is another name for the market economy system.Capitalism Pure capitalism has been called a Laissez-faire system; a French term meaning “let (people) do (as they choose).” Laissez-faire
Section 2 Limited Role of Government (cont.) Capitalism in the United States is best defined as an economic system in which private individuals own the factors of production but use them within certain legislated limits.
A.A B.B Section 2 Since the 1880s, the role the government plays in regulation has remained predominantly the same. A.True B.False
Section 2 Other Characteristics In a free market, economic activity is coordinated by private businesses and individuals responding to market signals.
Section 2 Other Characteristics (cont.) The American economy is known as a free enterprise system. Individuals are free to own the factors of production and decide how to use them within legal limits; same as capitalism.free enterprise system
Section 2 Other Characteristics (cont.) Americans also have freedom of choice where buyers, not sellers, make the decisions about what should be produced. –At times, the government has intervened in various areas of the economy to protect buyers and regulate price. The goal of a business is to make a profit.profit
Section 2 Other Characteristics (cont.) The desire to make a profit is referred to as profit incentive or profit motive.profit incentive The risk of failing, when profits are not realized, is also part of the free-enterprise system. In a free-enterprise system, the lure of profits encourages competition.competition For competition to exist, industry barriers to enter into, and exit from must be weak.
Section 2 Other Characteristics (cont.) Competition leads to an efficient use of resources since businesses are forced to keep costs of production as low as possible. One of the most important characteristics of capitalism is the existence of private property.private property View: Characteristics of the American EconomyCharacteristics of the American Economy
A.A B.B C.C Section 2 How much freedom should individuals have regarding the economy? A.A large amount B.A moderate amount C.A small amount
Section 3-Main Idea Section Preview In this section, you will learn about the goals of the American free-enterprise system and the rights and responsibilities that individual Americans face as members of this system.
Section 3-Key Terms economic efficiency economic equity standard of living economic growth Content Vocabulary
Section 3-Objectives element expand Academic Vocabulary
A.A B.B C.C Section 3-Polling Question Do you think the United States upholds certain economic values? A.Always B.Sometimes C.Rarely
Section 3 Goals of Free Enterprise The economic goals of free enterprise are freedom, efficiency, equity, security, stability, and growth.
Section 3 Goals of Free Enterprise (cont.) Economic goals of Americans: –Freedom—to allow each member of society to make choices –Economic efficiency—wise use of limited resourcesEconomic efficiency –Economic equity—economic system should be fair and justEconomic equity
Section 3 Goals of Free Enterprise (cont.) –Economic security—want protection against risks beyond our control –Economic stability—attempt to reduce extreme ups and downs in the standard of livingstandard of living –Economic growth—increased production of goods and services over timeEconomic growth
A.A B.B C.C D.D Section 3 “Because of scarcity, if the factors of production are wasted, fewer good and services overall will be produced.” Which goal does this quotation fall under? A.Freedom B.Efficiency C.Security D.Growth
Section 3 Rights and Responsibilities Individuals have both rights and responsibilities within a free-enterprise system.
Section 3 Rights and Responsibilities (cont.) The American free-enterprise system bestows numerous economic rights and protections on us, but we must take on certain responsibilities (such as supporting ourselves and our family). We must also become knowledgeable about government policies and elect responsible government officials.
A.A B.B C.C Section 3 Do you feel that, according to this book, most Americans are responsible? A.Always B.Sometimes C.Rarely
Section 4-Main Idea Section Preview In this section, you will compare the characteristics of socialism and capitalism.
A.A B.B Section 4-Polling Question Can you define socialism? A.Yes B.No
Section 4 Pure Socialism Pure socialism is characterized by centralized economic planning and state ownership of the factors of production.
Section 4 Pure Socialism (cont.) Pure command socialism is an economic system in which there is little private property and the government owns the factors of production and attempts to manage output and the distribution of goods.socialism View: Pure SocialismPure Socialism
Section 4 Pure Socialism (cont.) Karl Marx viewed history as a continual struggle between capitalists (owners of land, machines, and factories) and the proletariat (workers). proletariat –He believed that the capitalists exploited the proletariat. View: The Change From Capitalism to Socialism According to MarxThe Change From Capitalism to Socialism According to Marx
Section 4 Pure Socialism (cont.) He outlined the eventual collapse of capitalism and predicted the evolution of socialism into communism, an idealized society in which no government is necessary.communism Today, communism means any authoritarian socialist system that supports revolution as a means to overthrow capitalism and bring about socialist goals.
Section 4 Pure Socialism (cont.) –Democratic socialismDemocratic socialism –Authoritarian socialismAuthoritarian socialism In the twentieth century, socialism split into two major trends:
A.A B.B C.C D.D Section 4 The following are characteristics of pure socialism EXCEPT A.Most prices are set by the state. B.Individual risk taking is not allowed. C.A laissez-faire government is in control. D.Most of the major factors of production are owned by the state.
Section 4 The Benefits of Capitalism The main benefits of capitalism are economic efficiency and individual freedom.
Section 4 The Benefits of Capitalism (cont.) Supporters of capitalism: –Those who place a high value on personal freedom, initiative, and individuality. –Demonstrate that capitalism allows for more efficiency in the marketplace and for greater rates of economic growth. View: Planning in Market and Command EconomiesPlanning in Market and Command Economies
Section 4 The Benefits of Capitalism (cont.) The United States has an economy planned by private firms, individuals, and elected government officials, while socialism has an economy planned by central planners. Problems of capitalism: –Income is unequally distributed throughout the economy. –There are not enough schools and museums for the general public.
A.A B.B C.C Section 4 Do you feel that capitalism is beneficial for the economy? A.Definitely B.Somewhat C.Not at all
VS 1 All economic systems answer three basic questions: what to produce, how to produce, and for whom to produce.
VS 2 There are four basic types of economic systems: traditional, command, market, and mixed.
VS 3 The American economy is defined by six basic characteristics.
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Vocab1 economic system: way in which a nation uses its resources to satisfy its people’s needs and wants
Vocab2 traditional economy: system in which economic decisions are based on customs and beliefs that have been handed down from generation to generation
Vocab3 command economy: system in which the government controls the factors of production and makes all decisions about their use
Vocab4 market economy: system in which individuals own the factors of production and make economic decisions through free interaction while looking out for their own and their families’ best interests
Vocab5 market: the process of freely exchanging goods and services between buyers and sellers
Vocab6 circular flow of income and output: economic model that pictures income as flowing continuously between businesses and consumers
Vocab7 mixed economy: system combining characteristics of more than one type of economy
Vocab8 capitalism: economic system in which private individuals own the factors of production
Vocab9 laissez-faire: economic system in which the government minimizes its interference with the economy
Vocab10 free-enterprise system: economic system in which individuals own the factors of production and decide how to use them within legal limits; same as capitalism
Vocab11 profit: amount earned after a business subtracts its costs from its revenues
Vocab12 profit incentive: desire to make money that motivates people to produce and sell goods and services
Vocab13 competition: rivalry among producers or sellers of similar goods and services to win more business
Vocab14 private property: whatever is owned by individuals rather than by government
Vocab15 economic efficiency: wise use of available resources so as to obtain the greatest benefits possible
Vocab16 economic equity: the attempt to balance an economic policy so that everyone benefits fairly
Vocab17 standard of living: the material well- being of an individual, group, or nation, measured by how well their necessities and luxuries are satisfied
Vocab18 economic growth: expansion of the economy to produce more goods, jobs, and wealth
Vocab19 socialism: a system in which the government owns the major factors of production and attempts to manage output and the distribution of goods
Vocab20 proletariat: term Karl Marx used to refer to workers
Vocab21 communism: term used by Karl Marx for his idealized society in which no government is necessary
Vocab22 democratic socialism: system that works within the constitutional framework of a nation to elect socialists to office; the government usually controls only some areas of the economy
Vocab23 authoritarian socialism: system that supports revolution as a means to overthrow capitalism and bring about socialist goals; the entire economy is controlled by a central government; also called communism
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