ECONOMIC SYSTEMS

WATCH YOUTUBE: “Economic Systems and Macroeconomics: Crash Course Economics #3”

What you write: Economic systems help a society deal with the fundamental problem of scarcity What you need to know: How are economies organized? Economic systems - the definition is “organized way a society provides for the wants and needs of people”

The why?: Because without order, there would be chaos

What you write: Societies that are economically efficient produce less waste and receive more profit. What you need to know: What are economic goals? By accurately assessing the wants and needs of their people, societies are able to be economically efficient.

What you write: The three major economic systems are: 1. Traditional 2. Command 3. Market What you need to know: What do economic systems look like? Depending on the government, political structures, culture, socials systems, resources, and even geography, countries adopt different economic systems to meet their country’s needs.

What you write: Traditional Economies are the oldest and simplest economies They rely on habit, custom, and ritual to answer the three economic questions What you need to know: What is a Traditional Economy? Traditional Economies are most commonly used in communities that remain small and provide for their own communities. While they are considered successful if able to meet the needs of their people, these economies lack modern conveniences and often have a low standard of living.

What you write: In Command Economies, the major economic decisions are made for the people not by them The government, rather than the individual producers and consumers, answer the three economic questions What you need to know: What is a Command Economy? A Command Economy, also known as a central planned economy, is where the government owns both land and capital, and in a way owns labor as well, because it controls where people work and what they are paid.

What you write: In Command Economies, the government owns all the factors of production The purpose of government in a command economy is to make major economic decisions What you need to know: What else happens in a Command Economy? Command Economies lend itself to Communism and Socialism.

What you write: Market Economies are characterized by a great deal of freedom The individual producers and consumers answer the three economic questions in their own best interests The market economy does not provide for everyone What you need to know: What is a Market Economy? A Market Economy, allows people to their spend money on products they want most. Market economies also feature private ownership of resources, which lends itself to Capitalism.

What you need to know AND what you write: What are the advantages of a Market Economy? 1. high degree of individual freedom 2. adjusts gradually to change over time 3. relatively small degree of government interference 4. decision making is decentralized 5. variety of goods and services produced 6. high degree of consumer satisfaction

What you write: No nation today has a pure free market or a pure command economy Governments both purchase and provide goods and services for the public What you need to know: What is a Mixed Economy? A Mixed Economy, is a market-based economic system in which government is involved to some extent.