1. Unit 1: Foundations of Government
Economic Systems

2. Governments make the following economic decisions:
- What to produce
- How to produce it
- For whom to produce (who gets it)

3. Economic Systems
Capitalism
Based on free enterprise/ free market
Wealth of Nations
written by Adam Smith
suggested the government take a laissez faire approach to the economy
Competition plays a key role

4. Capitalism
Five characteristics of capitalism
private ownership & control of property & economic resources
free enterprise
competition
freedom of choice
possibility of profits

5. Capitalism
The US has a mixed market economy
Free enterprise
Government regulations

6. Socialism Government owns the basic means of production
Government plans the use of resources
Government distributes products and wages
Government provides basic social services
Socialists favored taking over the government through revolution

7. Socialism
Democratic Socialism
Want democracy in the political sphere
Want government involvement and control in the distribution of wealth

8. Critics argue that this form fails to solve most economic problems
Socialism
Critics argue that this form fails to solve most economic problems
Margaret Thatcher quote on socialism

9. Communism
Based on the ideas of Karl Marx
Argued capitalism exploits workers to benefit capitalists

10. Communism
Said when all property is held in common there was no need for government
Government makes all economic decisions; owns the land, natural resources, industry, banks, and transportation systems; and controls mass communication.