Unit 9, Lesson 5: Economic Systems Agenda: Finish Stock Market video Review lesson 4 –go over homework Lesson 5: Economic Systems Notes Economic Systems survey Outcome: Students will be able to describe the key characteristic of different economic systems

Market Economies/ Capitalism Decisions in the economy are based on supply and demand Private citizens, not the government, own the factors of production Market economies offer a high degree of individual freedom Businesses make their own decisions regarding what to produce, how to produce it, and for whom to produce it Consumers make their own decisions about what to buy Profit and income are the goals of this system

Market Economies/ Capitalism No one runs the economy, it runs itself No pure market economies in world; US pretty close but government provides services such as defense and a system of justice Government’s role is to make sure that markets are competitive; avoid monopolies World’s largest economies are market economies Advantages: people have lots of freedom and can become wealthy Disadvantages: people and companies are not promised any level of success Government tries to prevent monopolies (with regulation)

Command Economies /Communism Major economic decisions are made by the central government, individuals and businesses have little freedom Government tells producers what to do System is often referred to as socialism/ communism Under communism all property would be held in common and everyone would work together and be equal There is little incentive to work hard and get an education Command economies tend to be very inefficient because they do not react to supply and demand; North Korea- famine Many people in communist countries suffer persecution and face harsh economic systems

Mixed Economies/ Socialism Mixed economies combine basic elements of a market economy and a command economy Major industries such as health care, transportation, and major industries are owned and operated by the government Smaller businesses are owned by individuals People are not able to become as wealthy but are guaranteed basic services Tax rates are higher to pay for these services Many people work for the government France, Sweden, and Norway are good examples of mixed economies

Traditional Economies are almost completely locally based Based on a barter system, no money is involved Common in less advanced areas of the world Traditional economies are often heavily based on agriculture Very little flexibility in the economy, little room for growth People trade for the things they need

Guess what?

That was our last (official) notes of the year.

http://www.youtube.com/watch?v=8D6d6_-Vngo “Make Mine Freedom”

Read the article about Adam Smith and Capitalism and answer the corresponding questions. http://www.youtube.com/watch?v=8D6d6_-Vngo