2. Ch. 2 National Decision Making CIE3M1 The Individual and the Economy Mr. Nicholson

3. Three Major Questions 1.What are we going to produce? 2.How is it produced? 3.Who receives how much?

4. Answers For The Three Major Questions 1.Pure Traditional Economy 2.Pure Command Economy 3.Pure Market Economy

5. Economic Systems Model QuestionsTraditionalCommandMarket What? What we always have produced Government decides. Focus on essentials, cultural activities and military. Consumers vote with their purchases How? Same way we always have produced it. Government decides. Employ the most people. Producers have to keep costs low and quality high Whom? Same amounts to the same people as in the past. Government decides. Equality. Producers and human resources that produce high demand, small supply products receive the most income. Adv. Stable. Environmentally friendly. Equality. Essential needs met High quality, variety, and inexpensive goods. Disadv. No new technology for material comfort and health. Poor quality goods & services. Shortages. Income inequity.

6. Market  Private property rights  Profit  Consumer Sovereignty  Self-Interest  Competition

7. The Economy of Canada  Mixed market economy  Market / Command / Traditional

8. Objectives (E.C.C.) 1.Full Employment 2.Stable Prices 3.Balance of Trade 4.Economic Growth 5.Economic Justice 6.Economic Freedom 7.Economic Efficiency 8.Reasonable Debt

9. Conflicting Objectives Full Employment  Higher Inflation Balance of Trade  Less Economic Freedom Economic Efficiency  Economic Injustice

10. Economy of the Former Soviet Union  Public Ownership  Central Planning  5 Yr / 1 Yr Plans  Failure of coordination  Inadequate quality control  Lack of incentives  Pollution Please do #3 pg. 30