1. Economic Systems

2. Warm Up What goods should our society focus on producing?
How should they be produced? Who controls that?
Who should be able to consume them?
Write how you would respond to each question as it relates to one basic necessity: food.

3. Unit 2, Lesson 1 Notes

4. Economic Systems
Definition: The method used by a society or government to produce and distribute goods and services
Which system a country employs depends on its goals and values

5. 3 Basic Economic Questions
Since resources are limited, every society must answer three basic questions:
What goods and services should be produced?
How should these goods and services be produced?
Who should consume these goods and services?

6. What goods and services are to be produced?
A government must decide what to produce to satisfy its needs and wants
This decision involves trade-offs and opportunity cost (i.e. “guns or butter”)

7. How should goods and services be produced?
For example, should we produce electricity with oil, solar, or nuclear power?
Although there are countless ways to create what we want, LAND, LABOR, and CAPITAL are needed
However, the factors of production can be COMBINED in different ways

8. Who should consume these goods and services?
A government has to choose how to distribute the available goods and services
Who should consume depends on FACTOR PAYMENTS – income people receive for supplying factors of production

9. What are the five goals?
Define the five economic goals as provided on pages in your texts: Efficiency Freedom Security Growth Equity

10. What are the characteristics of the four Economic Systems?
Unit 2, Lesson 2 Notes
What are the characteristics of the four Economic Systems?

11. Economic Systems Answer Three Questions: What to produce?
How to produce?
Who consumes?
Based on Economic
Goals:
Efficiency
Freedom
Security
Equity
Growth
Types:
There are four types
of Economic Systems

12. Basic Types of Economic Systems
The question of WHO gets to consume these goods and services differs between ECONOMIC SYSTEMS
Four different economic systems have developed to address the 3 key economic questions:
Traditional
Command
Market
Capital

13. In a group, complete a “web” on one of the types of economies.
Traditional, Command, Market, Capital
In a group, complete a “web” on one of the types of economies.
Describe the economy in detail.
Features, advantages, disadvantages, what economic goals may be important to them.
Provide examples of countries with that type.

14. Traditional System
Economic decisions based on custom, religion, and/or ritual (no innovation or change)
Most often subsistence living w/ barter and trade among close-knit groups and families
Ex: Aborigines, Inuit (Eskimos), some tribes in Africa & S. America

15. Market System
Economic decisions are made by individuals and are based on trade
Aka: Capitalism, Free Enterprise System
Businesses operate for profit with limited government regulations/intervention
Control of resources and economic decision making is widely dispersed
Profit motive drives the economy

16. Command System
The government alone decides most economic decisions (what, how, for whom to produce)
The government controls almost all resources.
Profit motive does NOT drive the economy, government goals do.
Limited or no private businesses
Aka: Planned economies, Socialism
Ex: Communist regimes; USSR, Cuba, North Korea

17. Mixed-Economy System
Most economies do not fit into one of these categories completely
Most of the time, no single economic system has all of the answers either
This approach allows for the inclusion of several ideas into economic systems
The range in systems can be from closer to government dominated (command / centrally planned) to market dominated (market / free enterprise)

18. Today’s Economies Mixed Economies England Japan China France Cuba
Vietnam
N. Korea
USA
Pure Free Market
Command
Gov’t Controlled
Iraq
India

19. Where we Are Mixed System
Free Enterprise: Private or corporate ownership of capital goods.
Investments in firms are made in a free market by private decision.
High level of economic system