Presentation on theme: "Economic Systems: Directions"— Presentation transcript:
1 Economic Systems: Directions On pages you will create a 2 column note sheet. On the left side, you will copy the slides and on the right side you will answer questions, write examples and things that come to your mind as you are copying the slides.
2 Economic SystemThe way that a nation uses its resources to satisfy its people’s needs and wants. Answers:What to produceHow to produceFor whom to produce (how to distribute goods and services to people)
3 Command Economy (Socialism) Government owns and controls production, businessesGovernment plans economy: decides what and how to produce, sets prices and wagesGovernment distributes goods and services to people according to need. No private property.Spirit of cooperation, not competitionExamples: (you fill in on the right side of your paper)
4 Market Economy (Capitalism) Individuals own factors of production, businessesMarketplace -- consumer demand -- decides what to produce and how -- not government. “Invisible hand” guidesThe market sets prices and wages“Laissez-faire” -- let people do as they chooseExamples:
5 Your TurnImagine you are the leader of a newly created country on a tropical island. Explain how you will create an economy and what questions you will have to answer.
6 U.S. Market Economy: Free Enterprise System U.S. economic system based on goals:FreedomEfficiencyEquityStabilitySecurityGrowth
7 How can we measure the U.S. Economy? How do we measure whether our economic system is accomplishing the goals listed on the previous slide?
8 U.S. Market Economy: 6 Characteristics 1. Government has a limited role: Regulations on businesses to protect workers and consumers, provides some services2. Free Enterprise: Can own business, some restrictions
9 3. Freedom of Choice: Consumer choices decide what will be produced, some government rules protect consumers4. Profit incentive: Desire to make money makes people take risks to start businesses
10 5. Private property: Individuals or groups own property, not government 6. Competition: Rivalry among businesses provides better quality goods, services, prices
11 America’s Market Economy Free enterprise systemAnother term for America’s capitalist systemIndividuals free to own and control businessesGovernment sets some regulations
12 America’s Market Economy Freedom of choice:Buyers, not sellers, decide what will be produced -- consumer demandSome government regulation protects consumers
13 America’s Market Economy Profit incentive:Desire to make money drives entrepreneurs to start and invest in businesses to make goods, provide services. Self-interestProfit: Money remaining after costs of production paid
14 America’s Market Economy Private property:Property owned by individuals, businesses -- not government
15 America’s Market Economy Competition:Desire for profit encourages individuals and businesses to compete … for best prices and quality
16 Create a Cost-Benefit Analysis What are the costs and benefits of the U.S. Capitalist System?What are the costs and benefits of a command economic system?