Presentation on theme: "ECONOMIC TERMS AND SYSTEMS American Studies. Practice Question Economies must address how to produce goods and services. In the economy of a certain."— Presentation transcript:
Practice Question Economies must address how to produce goods and services. In the economy of a certain country, some factories are owned by individuals and private companies, and other factories are owned and controlled by the government. What type of economy does this country have? A. mixed B. market C. traditional D. command
Traditional Economy Primitive or outdated system Focused mostly on agriculture Economy based on traditions, customs, and beliefs of certain cultures Usually in rural and under-developed areas Examples: Tea plantations in Southeast India, native farming communities in Peru, etc.
Market Economy All economic decisions are made by individuals, not the government Economic/production decisions and prices are based on supply and demand Some laissez-faire (hands-off) and others have some government regulation Examples: US, Great Britain, Canada Many market economies still have some government directed economic planning so they are actually mixed economies
Command Economy Planned by central authority Government based/owned production Need-based distribution of goods and resources Examples: China*, Russia*, Cuba, North Korea
Practice Question Economic systems answer the question of how goods and services are produced. What is one way a country could change form a command economy to a market economy? A. if the government takes control of family-owned farms B. if privately owned banks become subject to stricter regulation C. if agricultural and factory workers are required to join labor unions D. if industries that had been owned by the government become privately owned
Mixed Economy Some parts of production controlled by individuals, other companies controlled by the government Capitalism: Private ownership of means of production, working for profit in competitive system Communism: Classless, stateless social structure with common shared ownership of means of production Socialism: Social ownership, goods produced for use not profit/wealth accumulation, distribution of goods depends on individuals contribution to society
Practice Question Which statement correctly describes the role of the government in a country with a mixed economy? A. the government allows economic decisions to be made by the society’s traditions and customs. B. the government makes all decisions regarding the production and distributions of goods. C. the government makes some of the production and distribution decisions, but other economic decisions are made by individuals. D. the government exercises no decision making in economic matters; production and distribution are determined solely by individuals.