1. 2-4 Modern Economies in a Global Age Mixed Economies

2. Essential Questions What are the main characteristics of a mixed economy? Why most modern economies are mixed economies? Why are modern economies becoming increasingly more global?

3. Mixed Economies Contain elements of traditional, command, and market systems Are the most common type of economic system

4. Mixed Economy What is a mixed economy? What is the goal? List one advantage List one disadvantage. What is the most popular economic system?

6. Today’s Mixed Economies Life in a Mixed Economy Family farming in U.S. serves as example of mixed economy Traditional: all members of the family help bring in harvest Command: affected by government—public school, roads, Social Security Market: own land, sell their products in competitive market

7. Types of Mixed Economies Most economies emphasize one type; U.S. basically has a market system Many European countries have a greater mix of market and command elements France—government controls some industries; provides social services Sweden—state owns part of all companies; lifelong benefits, high taxes Namibia—traditional; state supports market, foreign investment

8. Trends in Modern Economies Economies change in response to natural, social, political changes East European economies changed after fall of communism

9. Trends in Modern Economies Trend 1: Changes in Ownership Economies in transition often go through changes in ownership To nationalize is to change from private to government ownership To privatize is to change from government to private ownership

10. Trends in Modern Economies TREND 2: Increasing Global Ties Growth of global economy—economic actions across national boundaries recent agreements open up world markets to trade among countries fast, safe, cheap transport of resources, products eases distribution phone, computer links make financial transactions quick, inexpensive cross-border business partnerships lower research, production costs

11. Circular Flow Model of a Mixed Economy

12. Government in the Market Governments buy labor in the factor market to have employees help run its programs. Governments purchase goods and services from firms in the product market. Governments also collect taxes from both households and firms. How are governments involved in the product market?

13. Comparing Mixed Economies Most modern economies are mixed economies. The figure below shows a continuum of mixed economics in today’s world. Why is China a little bit farther to the right on the diagram below than Cuba?

14. North Korea and China North Korea represents one extreme of the continuum. North Korea’s economy is almost totally dominated by the government. The government owns all the property and output equipment. China, on the other hand, is closer to the center of the continuum because China is going through an economic transition toward privatization of state- owned firms.

15. Hong Kong Hong Kong represents one of the world’s freest markets. In Hong Kong, the private sector rules. The government protects private property and rarely interferes in the free market, aside from establishing wage and price controls on rent and some public services.

16. Summary Write a summary answering the Essential questions What are the main characteristics of a mixed economy? Why most modern economies are mixed economies? Why are modern economies becoming increasingly more global?

18. Capitalism (Market economy) Socialism (mixed economy) Communism (Command economy) Ownership and control Competition Standard of Living Individuals control means of production Market determines what goods will be sold at what price Competition keeps prices low and quality high high standard of living and economic security Individuals free to earn profits, but may risk losses Basic means of production owned and managed by government Private ownership, with regulation, of businesses Cooperation stressed over competition high standard of living and economic security High taxes provide free health care and education Government owns means of production Government determines what goods will be sold at what price No competition, lower quality goods Goal is equality for everybody, enforced by the government

19. Work with your table groups to demonstrate your understanding of economies. Analyze the following scenarios and then identify the type of economy that is being described in the statement. Economic Scenarios

20. In this economy manufacturers of automobiles control the number of vehicles produced each month in a effort to avoid surpluses that would minimize their profits. Scenario #1

21. In this economy, the government produces it’s signature crab flavored soft drink and determines that it will be sold for $1.25 in all stores. Scenario #2

22. In this economy, investors can make millions investing in the construction of new homes, but it is just as likely that the value of these properties could decrease by 40% and they will lose millions of dollars. Scenario #3

23. In this economy, unemployment is around 3% and although taxes are high, all members of the society have access to good schools and hospitals. Scenario #4

24. In this economy, there are only 3 types of automobiles to choose from. They often break down and they are all painted a light brown color. Scenario #5

25. In this economy, you are the owner of construction company, but all your materials to build houses is regulated by the government to ensure safe housing for all. Scenario #6

26. In this economy, the value of goods fluctuates greatly and as a company you must continue to produce quality goods, or risk being out of business. Scenario #7