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ECONOMIC SYSTEMS Economic Systems -- The different ways money is distributed in countries. Feudalism: In this system wealth is based on ownership of resources.

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Presentation on theme: "ECONOMIC SYSTEMS Economic Systems -- The different ways money is distributed in countries. Feudalism: In this system wealth is based on ownership of resources."— Presentation transcript:

1 ECONOMIC SYSTEMS Economic Systems -- The different ways money is distributed in countries. Feudalism: In this system wealth is based on ownership of resources by a few privileged families. These resource owners collect wealth through use of their resources while the poor have no opportunity for advancement. Resources are passed down by wealthy families from generation to generation. Few Rich Some Middle Most Poor

2 Characteristics of Feudalism: Economic Inequality No Economic Choices

3 Capitalism: In this system wealth is not simply collected. It is created and distributed. The basic idea is that every person has some resources (capital). If these resources are used wisely (good investments) then these resources could begin to earn money for the investor. With capitalism the people own all resources. Money earned – Investment = Profit

4 GRACE’S LEMONADE EMPORIUM Investment Costs: CupsLemonade MixBags of Ice Total Costs:30 cents per Cup Initial Investment: $ Cups of Lemonade Money Earned: 10 Cups x $1.00 per cup = $10.00 Profit: Money Earned - Investment = Profit $ $3.00 = $7.00

5 ECONOMIC CHOICES Good: Reinvest the profits into the company. Thereby using the profit to make a bigger profit. 20 Cups (at $6.00) x $1.00/Cup = $20.00 Bad: Go to Fern’s and buy lunch with the profits. Sandwich + Chips+ Soda = $7.00 Profit = $0.00 Profit = $14.00 Medium Go to Fern’s and buy sandwich with the profits. Sandwich = $ Cups (at $3.00) x $1.00/Cup = $10.00 Profit = $7.00

6 Capitalism: In this system wealth is not simply collected. It is created and distributed. The basic idea is that every person has some resources (capital). If these resources are used wisely (good investments) then these resources could begin to earn money for the investor. With capitalism the people own all resources. Few Rich Few Poor Majority in the Middle Money earned – Investment = Profit

7 Characteristics of Capitalism: Economic Choices Economic Inequality No (Very Little) Government Involvement

8 Communism: Economic system based on the idea that ownership of resources creates inequalities, which eventually lead to violence and unhappiness. In communism there is only public ownership and management of all resources. This usually takes the form of the government controlling the country’s resources and all citizens essentially working for the government. No Rich No Poor Everyone the Same

9 Characteristics of Communism: No Economic Choices Economic Equality Total Government Involvement

10 Socialism Economic system based on the philosophy that it is the responsibility of the government to step in at times, and take over certain aspects of society where, if left alone, large numbers of people would suffer. In this economy there is partial ownership of resources by the government.

11 Characteristics of Socialism: Partial Government Involvement Some Economic Choices Some Economic Inequality


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