2. Copyright Information Presentation Plus! Economics: Today and Tomorrow Copyright © by The McGraw-Hill Companies, Inc. Developed by FSCreations, Inc., Cincinnati, Ohio 45202 Send all inquiries to: GLENCOE DIVISION Glencoe/McGraw-Hill 8787 Orion Place Columbus, Ohio 43240

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4. 3 Contents CHAPTER FOCUS SECTION 1Comparing Capitalism and Socialism SECTION 2Changing Authoritarian Socialism–The Case of China SECTION 3Nations Move Toward the Market System CHAPTER SUMMARY CHAPTER ASSESSMENT Click a hyperlink to go to the corresponding section. Press the ESC key at any time to exit the presentation.

5. 4 Chapter Focus 1 Why It’s Important Why do people in some countries pay much higher taxes than Americans do? How do other nations’ economies work? This chapter explains the differences between capitalism and socialism–and why many nations are moving toward free enterprise. Click the Speaker button to listen to Why It’s Important.

6. 5 Chapter Focus 2 Chapter Overview Chapter 19 compares capitalism and socialism, discusses China’s progress from a communist economy to a mixed economy, and outlines economic changes in several other countries.

7. End of Chapter Focus Click the mouse button to return to the Contents slide.

8. 7 Section 1-1 Reader’s Guide Section Overview Section 1 outlines the major characteristics of pure market capitalism and pure socialism and explores the benefits of capitalism.  Objectives –What are the key characteristics of pure socialism?  –How did socialism develop?  –What are the benefits of capitalism? –What are the three characteristics of pure market capitalism?  Click the mouse button or press the Space Bar to display the information. Section 1 begins on page 497 of your textbook.

9. 8 Terms to Know –communism  –democratic socialism  –authoritarian socialism –proletariat  Section 1-2 Reader’s Guide (cont.) Click the Speaker button to listen to the Cover Story. Click the mouse button or press the Space Bar to display the information. Section 1 begins on page 497 of your textbook.

10. 9 Section 1-3 Some government intervention occurs in the American economy, but generally the marketplace answers the three basic economic questions of WHAT, HOW, and FOR WHOM goods and services should be produced..  Introduction Click the mouse button or press the Space Bar to display the information. In command economies, however, the government (not the market) answers these three basic questions.

11. 10 Section 1-3 Introduction (cont.) Click the mouse button or press the Space Bar to display the information. In this chapter, you will study different economic systems.  The system that we know best in the United States is market capitalism.  The opposite of this system is pure command socialism.

12. 11 Section 1-4 Click the mouse button or press the Space Bar to display the information. Lecture Launcher During the 1800s, Great Britain gained control of Hong Kong, a small territory once belonging to China. As part of the British Empire, Hong Kong flourished economically. In 1997, Hong Kong was returned to China. How this will effect Hong Kong’s long-term economy remains to be seen.  What are the three basic economic questions that the economic systems of China, Great Britain, and all nations must answer?

13. 12 Section 1-4 Click the mouse button or press the Space Bar to display the information. Lecture Launcher (cont.) How are these questions typically answered in a capitalist economy like Great Britain ?  How are they typically answered in a socialist economy like China?

14. 13 Section 1-5 Click the mouse button or press the Space Bar to display the information. Pure Market Capitalism Operates on the basis of the three P’s: prices, profits, and private property.  A government in a pure capitalist system provides only public goods such as national defense and police protection.

15. Figure 1.1a Pure Market Capitalism (cont.) Figure 19.1

16. 15 Section 1-Assessment 1 Discussion Question In the United States economy functioning under pure capitalism? Explain. Possible response: The U.S. economy is very far from pure capitalism because the government provides much more than just national defense and police protection. In fact, government provides an enormous number (in both percentage and total) of jobs. Click the mouse button or press the Space Bar to display the answer.

17. 16 Section 1-6 Click the mouse button or press the Space Bar to display the information. Pure Socialism An economic system with little private property, where virtually all the factors of production are owned and controlled by the state.  Karl Marx saw history as a struggle between capitalists and the proletariat, or workers.  He believed a product’s value should be based on the labor used to produce it, therefore selling something for a profit is a form of stealing money from the worker who made it.

18. 17 Section 1-6 Click the mouse button or press the Space Bar to display the information. Pure Socialism (cont.) Marx predicted the fall of capitalism and the evolution of socialism into communism, or an ideal economic system with no need for government.  The communist economies of today are very different from Marx’s theory.  In the twentieth century socialism split into two trends.

19. 18 Section 1-6 Click the mouse button or press the Space Bar to display the information. Pure Socialism (cont.) Democratic socialism is where the government controls only parts of the economy.  Authoritarian Socialism is where the central government controls the entire economy.  Present day communism is an authoritarian socialist system.

20. Figure 1.1b Pure Socialism (cont.) Figure 19.1

21. Figure 1.2 The Marxian View of Socialism Figure 19.2 The Change from Capitalism to Socialism According to Marx Clearly Marx did not accurately predict what would happen in capitalist nations. Indeed, the opposite has proven to be true.

22. 21 Section 1-Assessment 1 Discussion Question Develop an argument against Marx’s view that it is wrong for a company to make a profit. Answers may vary. Students should demonstrate an understanding of how profit motivates entrepreneurs and workers. Click the mouse button or press the Space Bar to display the answer.

23. 22 Section 1-13 Click the mouse button or press the Space Bar to display the information. Benefits of Capitalism Individual values play a major role in comparing advantages and disadvantages of capitalism and socialism.  Capitalism allows more freedom and personal initiative.  Capitalism provides for more efficiency in economy and greater rates of growth.

24. 23 Section 1-13 Click the mouse button or press the Space Bar to display the information. Benefits of Capitalism (cont.) Both capitalism and socialism require planning, the difference is who does the planning.  Capitalism does lead to inequities in distribution. Also, capitalist countries often do not have enough social programs such as schools and museums (as compared to socialist countries).

25. 24 Section 1-Assessment 1 Discussion Question How would you defend against the argument that capitalism leads to inequities in distribution? Answers may vary. Students may note that this is also true of socialism. They may find that the benefits of capitalism far outweigh this negative. Click the mouse button or press the Space Bar to display the answer.

26. 25 Section 1-Assessment 1 Section Assessment What are the three characteristics of pure market capitalism? The three characteristics are prices, profits, and private property. Prices are set by forces of supply and demand. Free movement of resources go to where profits are highest, and risk takers may be rewarded. Private property rights exist due to decentralized decision making. Click the mouse button or press the Space Bar to display the answer.

27. 26 Section 1-Assessment 2 Section Assessment (cont.) Click the mouse button or press the Space Bar to display the answer. What are the key characteristics of pure socialism? The key characteristics of pure socialism are prices set by government, most resources owned and controlled by government, private property rights strictly limited, no individual risk taking, and decision making centralized in the hands of government.

28. 27 Section 1-Assessment 3 Section Assessment (cont.) Click the mouse button or press the Space Bar to display the answer. What are the benefits of capitalism? Answers should include personal freedom, initiative, individuality, efficiency, and economic growth.

29. 28 Section 1-Assessment 4 Section Assessment (cont.) Click the mouse button or press the Space Bar to display the answer. Making Comparisons Create a table that compares how each of the following functions is handled under capitalism and democratic socialism; setting price of goods; ownership of production; economic planning; business failures. For help in creating tables, see page xvii in the Economic Handbook. Students’ tables should be based on information in Figure 19.1 on page 498.

30. 29 Section 1-Assessment 4 Work in small groups to design symbols or logos for capitalism and socialism. Be prepared to explain your symbols or logos. Section Close

31. End of Section 1 Click the mouse button to return to the Contents slide.

32. 31 Section 2-1 Reader’s Guide Click the mouse button or press the Space Bar to display the information. Section 2 begins on page 503 of your textbook. Section Overview Section 2 outlines how the Chinese economy developed after World War II, reviews China’s transition to a mixed economy, and explores China’s future economic prospects.  Objectives –What have been two major problems in China’s attempt to move to capitalism? –How did the Chinese economic system develop following World War II? 

33. 32 Section 2-2 Reader’s Guide (cont.) Click the Speaker button to listen to the Cover Story. Click the mouse button or press the Space Bar to display the information. Section 2 begins on page 503 of your textbook. Terms to Know –World Trade Organization (WTO) –five-year plans 

34. 33 Section 2-3 Click the mouse button or press the Space Bar to display the information. The People’s Republic of China remains the largest nation that has some form of command socialism.  In this section, you’ll learn that a growing area of China has an economic system that is much closer to that of the United States. Introduction

35. 34 Section 2-3 Click the mouse button or press the Space Bar to display the information. In the early 1990s, China made Shanghai a “special economic zone.” By 1997, the city’s per capita income was over three times the per capita income of the rest of the country. Shanghai is being rebuilt from the ground up, and the construction and changes are so vast and quick that Shanghai’s maps have to be updated every three months.  Why is the development of Shanghai, and other Chinese policies that promote private enterprise of interest to the United States and the rest of the world? Lecture Launcher

36. 35 Section 2-4 Click the mouse button or press the Space Bar to display the information. Development of China’s Economic System Communists won the civil war following World War II, and the government started an economic system based on five-year plans.  These plans were unsuccessful, so the government began to implement reforms.  In 1978, people were given ability to rent land and be fully responsible for that plot; farm productivity increased dramatically.

37. 36 Section 2-4 Click the mouse button or press the Space Bar to display the information. Development of China’s Economic System (cont.) The mid-1980s brought further reforms, allowing managers of state-owned businesses much more control.

38. 37 Section 2-Assessment 1 Discussion Question Click the mouse button or press the Space Bar to display the answer. Why do you think the Chinese government only allow citizens to rent land and not buy it? Allowing people to buy the land takes the control away from the government, which goes against communistic philosophy.

39. 38 Section 2-7 Click the mouse button or press the Space Bar to display the information. The Transition Toward a Mixed Economy In mid-1980s, 70 percent of industrial production was by state-owned businesses; today it is less than 40 percent.  Pure capitalism cannot be achieved because China still owns most industries and farmland (farmers rent the land in 15- year increments).  Without property rights, corruption is unavoidable.  China must establish a rule of law if it wants to work toward capitalism.

40. 39 Section 2-Assessment 1 Discussion Question Click the mouse button or press the Space Bar to display the answer. Why is establishing a rule of law and property rights essential to creating capitalism? Because capitalism requires that individuals have the right to property and a lawful society to make free economic choices. By keeping all of the property rights in the hands of the state, capitalism can never be achieved.

41. 40 Section 2-9 Click the mouse button or press the Space Bar to display the information. Prospects for China’s Economic Future China was admitted to the World Trade Organization in 2000, opening it to the world market.  China represents a large market for foreign businesses.

42. 41 Section 2-Assessment 1 Discussion Question Clck the mouse button or press the Space Bar to display the answer. Choose one of the following groups of people. How do you think the overall transition to capitalism will affect this group? Explain.  farmers educated workers unskilled laborers managers of government-owned businesses.

43. 42 Section 2-Assessment 1 Discussion Question Click the mouse button or press the Space Bar to display the answer. Answers will vary, but students should demonstrate an understanding of China’s communist economic system as it affects these groups, and if or how it would change under a capitalist system.

44. 43 Section 2-Assessment 1 Section Assessment Click the mouse button or press the Space Bar to display the answer. How did the Chinese economic system develop following World War II? The Communist government developed an economic system based on five-year plans. When the first five-year plan failed to meet expectations, the government replaced central planning with regional planning. Other reforms followed in the 1970s and 1980s to give more authority to managers of state- owned industries and to provide incentives for people to work harder.

45. 44 Section 2-Assessment 2 Section Assessment (cont.) Click the mouse button or press the Space Bar to display the answer. Graphic Organizer Create a diagram like the one on page 506 of your textbook to explain two major problems China is facing in its move toward capitalism. Problem: Incomplete property rights Cause: The state still owns large parts of urban industries and the land Effect: Little incentive to work hard or for farmers to improve the land Problem: Establishing the rule of law Cause: No specific property rights exist Effect: Corruption

46. 45 Section 2-Assessment 3 Section Assessment (cont.) Synthesizing Information Explain how government involvement in setting production quotas for industries could lead to either a surplus or a shortage of goods and services. Incorporate real-world examples in your explanation. Quotas ignore market forces, which alleviate surpluses and shortages. Click the mouse button or press the Space Bar to display the answer.

47. 46 Section 2-Assessment 4 Discuss the following question: What is the greatest challenge facing China in its move to a mixed economy? Section Close

48. End of Section 2 Click the mouse button to return to the Contents slide.

49. 48 Section 3-1 Click the mouse button or press the Space Bar to display the information. Section 3 begins on page 508 of your textbook. Reader’s Guide Section Overview Section 3 explores privatization in Russia, the move toward free enterprise in Sweden, and economic changes in some Latin American countries.  Objectives –How has the Swedish economy been changing?  –What changes have recently occurred in Latin American economies? –How has Russia changed since privatization? 

50. 49 Section 3-2 Click the Speaker button to listen to the Cover Story. Click the mouse button or press the Space Bar to display the information. Section 3 begins on page 508 of your textbook. Reader’s Guide (cont.) Terms to Know –welfare states –privatization 

51. 50 Section 3-3 Click the mouse button or press the Space Bar to display the information. The centralized command economy lasted for 74 years in the Soviet Union, and more than 40 years in Eastern Europe. Introduction Economics textbooks written 15 or 20 years ago included information on the Soviet Union and its satellite countries in Eastern Europe. 

52. 51 Section 3-3 Click the mouse button or press the Space Bar to display the information. From the revolution in 1917 until the economic and political system collapsed in December 1991, the Soviet Union experienced five-year plans, central- planning commissions, and hundreds of other types of commissions.  Introduction (cont.) In this section, you’ll learn about Russia’s—and other nations’—hard road to capitalism.

53. 52 Section 3-3 Click the mouse button or press the Space Bar to display the information. “I have contemplated this long and hard. Today, on the last day of the outgoing century, I am retiring.” These were the words spoken by Russian President Boris Yeltsin on December 31, 1999. “Russia will never return to the past…Russia must go into the next millennium with new politicians, with new faces, with new clever, strong, energetic people…” Lecture Launcher

54. 53 Section 3-3 Click the mouse button or press the Space Bar to display the information. Financial markets soared with the news in hopes that Yeltsin’s successor, Vladimir Putin, who promises to uphold the Yeltsin’s firmly established democratic state and developing free markets, will make the hard decisions that will promote economic prosperity. Lecture Launcher (cont.)

55. 54 Section 3-3 Click the mouse button or press the Space Bar to display the information. Lecture Launcher (cont.) How long did Russia have a centralized economy?  When did the economic and political system of the Soviet Union collapse?  Why has the road to capitalism been difficult for Russia?

56. 55 Section 3-4 Click the mouse button or press the Space Bar to display the information. Privatization in Russia Privatization means the change from state ownership of business, land, and buildings to private ownership.  Since privatization leads to increased unemployment and other economic difficulties, some people protest the change (some even want to go back to the old system).  Prices in Russia are now determined by supply and demand (instead of by government officials).

57. 56 Section 3-4 Click the mouse button or press the Space Bar to display the information. Privatization in Russia (cont.) Many Russian factories are still quite inefficient.  Many government-owned businesses were sold to “friends of government.”  People are bartering because they do not have faith in Russian currency and in order to avoid paying taxes.

58. 57 Section 3-Assessment 1 Discussion Question Click the mouse button or press the Space Bar to display the answer. What does the government need to do so that people will stop bartering and start using Russian currency? It needs to make the Russian ruble strong and give people faith in their currency. It also needs to give some incentives for paying taxes, so that it can get is economy back on a legitimate track.

59. 58 Section 3-9 Click the mouse button or press the Space Bar to display the information. Changes in Sweden Sweden is called a welfare state because it blends capitalism and socialism by combining private ownership of the means of production and competitive allocation of resources with goal of social equality for all citizens.  The country has one of the highest per- capita incomes in the world.  Sweden’s government practically guaranteed life-long employment.

60. 59 Section 3-9 Click the mouse button or press the Space Bar to display the information. Changes in Sweden (cont.) Government spending and taxes represented about 54 percent of the country’s annual economic activity.  In a move toward free enterprise, the government is cutting taxes and doing away with some government jobs, easing regulations on businesses, and privatizing some previously government-owned businesses.

61. Figure 3.1 Changes in Sweden (cont.) Figure 19.6 Tax Levels in Sweden and the United States Tax levels in Sweden in 1970 were about equal to those in the United States, but rose more than 25 percent higher by the 1990s. Despite these high taxes, the Swedes enjoy a high standard of living.

62. 61 Section 3-Assessment 1 Discussion Question Click the mouse button or press the Space Bar to display the answer. What are some ways the Swedish people may be reacting to the economic changes that are occurring? People may be upset because they are losing some government-funded programs and their job security. They may be happy because their taxes are going down.

63. 62 Section 3-12 Click the mouse button or press the Space Bar to display the information. Changes in Latin America Many of these countries are capitalist but have large government sectors.  Since 1985, many government ventures are being privatized.  Many of these countries are trying to follow the model of Mexico but are limited by political disputes.  Chile and Argentina have successfully privatized many sectors.

64. 63 Section 3-Assessment 1 Discussion Question Click the mouse button or press the Space Bar to display the answer. Why would political leaders want to maintain certain socialist portions of their economy? These socialist sections of the economy give the government control and power, and leaders see control of these things as in the country’s best interest.

65. 64 Section 3-Assessment 1 Section Assessment Click the mouse button or press the Space Bar to display the answer. Graphic Organizer Create a diagram like the one on page 511 of your textbook to list and explain how Russia’s economy has changed since privatization. Answers will vary.

66. 65 Section 3-Assessment 2 Section Assessment (cont.) Click the mouse button or press the Space Bar to display the answer. How has the Swedish economy been changing? The Swedish government has begun to cut taxes and eliminate some public jobs. It has eased regulations on businesses and approved foreign ownership of some companies. In addition, the government has ended its monopoly in some industries and plans to move further toward a market economy in the future.

67. 66 Section 3-Assessment 3 Section Assessment (cont.) Click the mouse button or press the Space Bar to display the answer. What changes have recently occurred in Latin American economies? Latin American economies have privatized many government enterprises in recent years.

68. 67 Section 3-Assessment 3 Section Assessment (cont.) Click the mouse button or press the Space Bar to display the answer. Evaluating Primary and Secondary Sources Use the Internet to find a primary and secondary account of the privatization of Russia’s economy. Write a report analyzing and evaluating the validity of information from each source for bias, propaganda, point of view, and frame of reference. Answers will vary.

69. 68 Section 3-Assessment 4 Click the mouse button or press the Space Bar to display the answer. Discuss the shift in values that is brought about by the privatization of industries. Section Close

70. End of Section 3 Click the mouse button to return to the Contents slide.

71. 70 Chapter Summary 1 Section 1: Comparing Capitalism and Socialism Pure capitalism operates on the basis of the three Ps: Prices, Profits, and Private Property.  Pure socialism is an economic system in which there is little private property and the state owns virtually all the factors of production.  Karl Marx predicted that a class struggle between the capitalists and the proletariat would evolve into a system of communism.  In democratic socialism, government usually controls only some areas of the economy. Click the mouse button or press the Space Bar to display the information.

72. 71 Chapter Summary 2 Section 1: Comparing Capitalism and Socialism (cont.) Authoritarian socialists advocate revolution as a means to overthrow capitalism and bring about socialist goals.

73. 72 Chapter Summary 3 Click the mouse button or press the Space Bar to display the information. Section 2: Changing Authoritarian Socialism–The Case of China The People’s Republic of China remains the largest nation that has some form of command socialism.  After World War II, the Chinese government based the centralized economy on five-year plans.  Reforms in the 1970s and 1980s gave individuals more decision-making power and the ability to sell part of their goods and services for a profit.

74. 73 China’s economy is starting to open to the rest of the world. Chapter Summary 4 Section 2: Changing Authoritarian Socialism–The Case of China (cont.) Incomplete property rights, the lack of the rule of law, and resulting corruption are problems that China faces today. 

75. 74 Chapter Summary 5 Click the mouse button or press the Space Bar to display the information. Section 3: Nations Move Toward the Market System When Russia moved toward privatization, many workers lost their jobs, prices skyrocketed, and the Russian economy fell into serious decline.  Many hardships face the Russian people as they make the transition to free enterprise.  As a welfare state, Sweden has very high taxes that support the nation’s people from cradle to grave.

76. 75 Chapter Summary 6 Click the mouse button or press the Space Bar to display the information. Section 3: Nations Move Toward the Market System (cont.) Sweden has recently initiated changes in its welfare socialist economic system.  Many Latin American countries have privatized their transportation and energy industries.

77. End of Chapter Summary Click the mouse button to return to the Contents slide.

78. 77 Chapter Assessment 1 Click the mouse button or press the Space Bar to display the answer. What is the role of supply and demand in pure market capitalism? Recalling Facts and Ideas Supply and demand determine prices.

79. 78 Chapter Assessment 2 Recalling Facts and Ideas (cont.) Click the mouse button or press the Space Bar to display the answer. Why do we call pure capitalism a price system? because prices are allowed to seek their own level in response to supply and demand

80. 79 Chapter Assessment 3 Click the mouse button or press the Space Bar to display the answer. Recalling Facts and Ideas (cont.) Can individuals take business risks under pure socialism? Explain. No, the state takes the risks, and citizens pay collectively for risks that fail.

81. 80 Chapter Assessment 4 Click the mouse button or press the Space Bar to display the answer. Recalling Facts and Ideas (cont.) What term did Karl Marx apply to his ideal society? communism

82. 81 Chapter Assessment 5 Click the mouse button or press the Space Bar to display the answer. Recalling Facts and Ideas (cont.) How do pure market capitalism and pure socialism differ in regard to private property rights? In pure capitalism, private property rights exist, are legal, and are enforced by the government. In pure socialism, private property rights are strictly limited to small tools that an individual needs for an occupation.

83. 82 Chapter Assessment 6 Click the mouse button or press the Space Bar to display the answer. Recalling Facts and Ideas (cont.) What evidence shows that China is moving toward capitalism? It has begun to abandon central planning in favor of more local control of the economy. It also has embarked on a gradual sell-off of state-owned enterprises.

84. 83 Chapter Assessment 7 Click the mouse button or press the Space Bar to display the answer. Recalling Facts and Ideas (cont.) What two problems exist in China’s movement toward capitalism? incomplete property rights and establishing the rule of law

85. 84 Chapter Assessment 8 Click the mouse button or press the Space Bar to display the answer. Recalling Facts and Ideas (cont.) Describe the main economic change that is occurring in the former Soviet Union. It has begun a process of privatization in a move toward capitalism.

86. 85 Chapter Assessment 9 Click the mouse button or press the Space Bar to display the answer. Recalling Facts and Ideas (cont.) Why has Sweden been labeled a welfare state? because it combines private ownership of the means of production and competitive allocation of resources with the goal of social equality for its citizens

87. 86 Chapter Assessment 10 Click the mouse button or press the Space Bar to display the answer. Recalling Facts and Ideas (cont.) In what way have Latin American countries moved closer to market capitalism? They have privatized many government-owned companies.

88. 87 Chapter Assessment 11 Click the mouse button or press the Space Bar to display the answer. Making Comparisons Compare the type of planning used in a decentralized capitalist system with that used in a centralized command socialist system. Thinking Critically In a decentralized capitalist system, private firms, individuals, and elected government representatives undertake planning, which is built around the price system. In a socialist command system, central planners make all economic decisions.

89. 88 Chapter Assessment 12 Click the mouse button or press the Space Bar to display the answer. Thinking Critically (cont.) Understanding Cause and Effect Create a diagram like the one on page 514 of your textbook to explain why farmers generally are unwilling to invest in farm equipment and land improvement in China. government owns land and there are no private property rights  no incentive or interest in making improvements to the land

90. 89 Chapter Assessment 13 Click the mouse button or press the Space Bar to display the answer. Thinking Critically (cont.) Drawing Inferences What is the relationship between privatization and decentralization of an economy? Decentralization is an automatic consequence of privatization. When people are free to use their private property, central planning is not possible.

91. 90 Chapter Assessment 14 Making Predictions Analyze the graph on page 515 of your textbook, then answer the following questions. Reviewing Skills

92. 91 Chapter Assessment 15 Click the mouse button or press the Space Bar to display the answer. Reviewing Skills (cont.) What trend does the graph show? that prices per barrel of oil have increased over time

93. 92 Chapter Assessment 16 Click the mouse button or press the Space Bar to display the answer. Reviewing Skills (cont.) What do you predict will happen to Russia’s oil exports as a result of this trend? If the price of oil continues to increase, it seems safe to predict that Russia will export more oil.

94. 93 Chapter Assessment 17 Click the mouse button or press the Space Bar to display the answer. Reviewing Skills (cont.) What do you predict will happen to the amount of oil available to Russian consumers? If Russian oil manufacturers can receive increased prices for their oil exports, fewer barrels of oil will be available for Russian consumers.

95. 94 Chapter Assessment 18 Click the mouse button or press the Space Bar to display the answer. Reviewing Skills (cont.) On what do you base the prediction you made in question 3? Answers will vary but might include that the profit incentive drives resources to their most profitable avenue.

96. 95 Chapter Assessment 19 One of the first steps taken by former Communist countries on their move toward capitalism is privatization. What is privatization? the change from state ownership of businesses to private ownership Click the mouse button or press the Space Bar to display the answer.

97. End of Chapter Assessment Click the mouse button to return to the Contents slide.

98. Economic Concepts 1

99. Focus Activity 1.1 Continued on next slide.

100. Focus Activity 1.2

101. Focus Activity 2.1 Continued on next slide.

102. Focus Activity 2.2

103. Focus Activity 3.1 Continued on next slide.

104. Focus Activity 3.2

105. Chapter Launch Activity Click the mouse button to return to the Contents slide. Share with the class the economic choices you have made recently in response to your needs and goals. Discuss how your life would be different if you were not allowed to make economic choices freely. Take notes during the discussion and use your notes to write a paragraph beginning: “Limited economic freedom would...” In this chapter you will learn how socialist economic systems require extensive planning that necessarily limits citizens’ economic, political, and social freedoms.

106. Economics Online Explore online information about the topics introduced in this chapter. Click on the Connect button to launch your browser and go to the Economics: Today and Tomorrow Web site. At this site, you will find interactive activities, current events information, and Web sites correlated with the chapters and units in the textbook. When you finish exploring, exit the browser program to return to this presentation. If you experience difficulty connecting to the Web site, manually launch your Web browser and go to http://glencoe.com/sec/socialstudies/economics/econtoday2005/ index.php

107. BusinessWeek Online Explore online information about the topics introduced in this chapter. Click on the Connect button to launch your browser and go to the BusinessWeek Web site. At this site, you will find up-to-date information dealing with all aspects of economics. When you finish exploring, exit the browser program to return to this presentation. If you experience difficulty connecting to the Web site, manually launch your Web browser and go to http://www.businessweek.com

108. BW Spotlight 1 Continued on next slide. New banking policies recently introduced by the Chinese Communist government have made mortgages available to families so that they may buy their own homes. This feature is found on page 507 of your textbook. China’s Transformation to a Market Economy

109. BW Spotlight 2 Continued on next slide. What changes will Chinese workers face with the transformation to a free enterprise economy? Millions of workers who have worked in state-run operations will now have to find jobs in the private sector. Many will find the transition from the cradle-to-grave socialism to free enterprise a difficult adjustment. Click the mouse button or press the Space Bar to display the answer. This feature is found on page 507 of your textbook. China’s Transformation to a Market Economy

110. Click the mouse button or press the Space Bar to display the answer. This feature is found on page 507 of your textbook. BW Spotlight 3 What do you think will change the most as the Chinese have more contact with the outside world? Answers will vary. China’s Transformation to a Market Economy

111. NBR 1.1 define socialism.  compare the concept of ownership in a capitalist system with the ownership in a socialist system.  describe the challenges faced by state-owned industries. After viewing Comparative Economic Systems, you should be able to…  Economics and You Video 25: Comparative Economic Systems Click the mouse button or press the Space Bar to display the information. Continued on next slide.

112. NBR 1.2 Click the Videodisc button anytime throughout this section to play the complete video if you have a videodisc player attached to your computer. Click the Forward button to view the discussion questions and other related slides. Click inside this box to play the preview. Continued on next slide. Disc 1, Side 2 Chapter 25 Economics and You Video 25: Comparative Economic Systems

113. NBR 1.3 What is the main difference between capitalism and socialism? In capitalism, the factors of production are privately owned and controlled. In socialism, some of the factors of production are owned and controlled by the government. Disc 1, Side 2 Chapter 25 Click the mouse button or press the Space Bar to display the answer. Economics and You Video 25: Comparative Economic Systems

114. CTS 1 Continued on next slide. Predicting future events can be difficult and sometimes risky. The more information you have, however, the more accurate your predictions will be. This feature is found on page 512 of your textbook. Making Predictions

115. CTS 2 Continued on next slide. Learning the Skill Making Predictions To help you make predictions, follow the steps listed below.  –Gather information about the decision or action.  –Use your knowledge of history and human behavior to identify what consequences could result.  –Analyze each of the consequences by asking: How likely is it that this will occur? Click the mouse button or press the Space Bar to display the information. This feature is found on page 512 of your textbook.

116. CTS 4 Continued on next slide. Practicing the Skill Making Predictions Read the passage on page 512 of your textbook, then answer the questions that follow. This feature is found on page 512 of your textbook.

117. CTS 5 Internet use is growing rapidly in China. What trend does the passage show? Click the mouse button or press the Space Bar to display the answer. This feature is found on page 512 of your textbook. Continued on next slide. Making Predictions

118. CTS 6 yes Do you think this trend is likely to continue? Click the mouse button or press the Space Bar to display the answer. This feature is found on page 512 of your textbook. Continued on next slide. Making Predictions

119. CTS 7 Answers will point to the estimated growth statistics offered in the excerpt. On what do you base this prediction? Click the mouse button or press the Space Bar to display the answer. This feature is found on page 512 of your textbook. Continued on next slide. Making Predictions

120. CTS 8 Click the mouse button or press the Space Bar to display the answer. This feature is found on page 512 of your textbook. Making Predictions Answers will vary but might include the growth in the number of e-businesses in China; an even greater move to free enterprise, because the government will have difficulty controlling economic activities on the Internet; and further democratization of the political system. What are three possible consequences of this trend?

121. Economic Connection 1.2 History: American Socialism Debs’s success in the 1912 election proved to be the high point for the Socialist Party of America. Soon after, the party’s popularity began to fade. Many explanations have been given as to why socialism failed to gain lasting support in the United States. One of the most colorful came from the German historian Werner Sombart. In Why Is There No Socialism in the United States? (1906), Sombart noted that Americans enjoyed the highest standard of living in the world. “All socialist utopias come to nothing on roast beef and apple pie!” he observed.

122. Global Economy 3.1 Economics for Little Ones is one of a series of economics texts designed for first graders. Other titles in the series include Tales of Queen Economy, Evil Inflation, and Magical Computer. Learning About Capitalism

123. Click the picture to listen to the selection on page 502 of your textbook to find out more about Karl Marx. Be prepared to answer questions that appear on the next two slides. People and Perspectives 1.1 This feature is found on page 502 of your textbook. Karl Marx 1818–1883

124. People and Perspectives 1.2 According to Marx, what phrase sums up communist theory? abolition of private property Click the mouse button or press the Space Bar to display the answer. This feature is found on page 502 of your textbook. Karl Marx 1818–1883

125. People and Perspectives 1.3 Click the mouse button or press the Space Bar to display the answer. This feature is found on page 502 of your textbook. Karl Marx 1818–1883 Why was the incentive to work an issue Marx had to address? Marx had to address this issue because some people believed that when private property was abolished, all work would stop and the workers would be overtaken by “universal laziness.”

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