HOW GOVERNMENTS ANSWER WHAT, HOW, AND FOR WHO Economic Systems How does the economic systems we live under affect the types and ways are choices are made?

Economic Systems Just as individuals have to answer What and How, and For who (WHW) ; governments have to as well. What does it mean to say a government has to pick how to answer WHW We will be covering 3 types of “pure” Economic systems. Traditional Command Market

Why Governments Governments are the overarching bodies that affect are daily lives on multiple levels. Looking at Economic systems is the foundation of Macro-Economics The three systems, Traditional, Command, and Market are how we describe what influences the answers to WHW.

Economics Systems: Traditional Traditional Economic Systems: Are based on the customs and practices of their ancestors. The economic activities that you are expected to perform, as well as who is supposed to receive what is based off of ancestral practices and old customs.

Traditional Economy: What to Produce Determined from tradition Economic roles often passed down from generation to generation Clear division of labor based on age and gender

Traditional Economy: How to produce Determined by custom These customs are often passed down by either being taught by the previous generation or through oral traditions and mythology

Traditional Economy: Who gets Normally centered around traditional family and social units. Depending on the size and complexity of society that made use of traditional systems you could get different results.

Economic systems: Command Relies on government officials or central planners to decided on WHW. Very few people outside of the planners in a command economy have any real say in economic choices

Command Economy: What to produce Determined By government Officials We can see examples of this even from the U.S. past, with the Agricultural Adjustment Act of 1930.

Command Economy: How to produce Determined by government officials

Command Economy: Who gets Determined by government Officials

Economic Systems: Market In a market Economy, it is up to individuals to decided the answers to WHW. Everything is based off of individuals decisions. The government has no say at all. The only factors that regulate a market economy are Self Interest and Incentives Self Interest is what compels us to fulfill are wants and desires Incentives are things that encourage you to behave in a particular way

Market Economy: What to Produce Determined by Individuals Individual groups see what people want and decided to produce it.

Market Economy: How to Produce Determined by Individuals Individual groups decided to pick the most appropriate and efficient way to provided a good

Market Economy: Who gets Determined by Individuals Once a good is provided on the market, it is up to the individuals to find it and consume it.

Economic Systems: Mixed This is any economic system that has elements of all three of the other forms of Economic Systems present in it. (so basically everything is really some form of mixed)

So what is the United States? What Economic System do you think is closest to what the USA currently has?

So what is the U.S. The untied states is very close to a capitalist mixed economic system. The untied states practices a system of Free Enterprise or Free Business The United States does have limited government intervention

The Circular Flow of goods and services