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Chapter 2 Economic  Systems
Economic System <ul><li>The way a country decides to use its resources to satisfy its peoples wants and needs </li></ul>
Countries, like us have limited resources, so they must decide . .  .  <ul><li>1.  WHAT should be produced? </li></ul><ul>...
<ul><li>The way a country answers these three questions will determine the  type   of economic system  that country will h...
Types of Economic Systems TRADITIONAL MARKET COMMAND MIXED
TRADITIONAL <ul><li>Always done this way </li></ul><ul><li>Parents teach you trade </li></ul><ul><li>Families are tight </...
Command  (Socialism) <ul><li>Gov’t leaders control factors of production – make all decisions. </li></ul><ul><li>(One pers...
Market <ul><li>Opposite of Command economy </li></ul><ul><li>Decisions made by individuals not gov’t </li></ul><ul><li>Pro...
American Free-Enterprise system (Capitalism) <ul><li>Goals: </li></ul><ul><li>Freedom </li></ul><ul><li>Equity - fairness ...
Free – Enterprise Promotes. . .  <ul><li>Profit  – amount earned after cost to produce the product </li></ul><ul><li>Compe...
Mixed Economy <ul><li>Combination of market and command economy </li></ul><ul><li>Most countries have a mixed economy </li...
Economist – Adam Smith <ul><li>Father of the “Invisible Hand” theroy?? </li></ul><ul><li>believed . . . Gov’t should not i...
Economist Karl Marx <ul><li>believed . . . . .  </li></ul><ul><li>Capitalism would die out and pure communism (command) wo...
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Chapter 2

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Transcript of "Chapter 2"

  1. 1. Chapter 2 Economic Systems
  2. 2. Economic System <ul><li>The way a country decides to use its resources to satisfy its peoples wants and needs </li></ul>
  3. 3. Countries, like us have limited resources, so they must decide . . . <ul><li>1. WHAT should be produced? </li></ul><ul><li>2. HOW should it be produced? </li></ul><ul><li>3. For WHOM should it be produced ? </li></ul>
  4. 4. <ul><li>The way a country answers these three questions will determine the type of economic system that country will have. </li></ul>
  5. 5. Types of Economic Systems TRADITIONAL MARKET COMMAND MIXED
  6. 6. TRADITIONAL <ul><li>Always done this way </li></ul><ul><li>Parents teach you trade </li></ul><ul><li>Families are tight </li></ul><ul><li>Know what you are going to do </li></ul><ul><li>Poor country -- Page 36 </li></ul>
  7. 7. Command (Socialism) <ul><li>Gov’t leaders control factors of production – make all decisions. </li></ul><ul><li>(One person, a small group, or a group of central planners make decisions) </li></ul><ul><li>Gov’t decides pay and where you will work </li></ul><ul><li>Gov’t decides how goods & services will be distributed. </li></ul><ul><li>Economic decisions are made by the government </li></ul>
  8. 8. Market <ul><li>Opposite of Command economy </li></ul><ul><li>Decisions made by individuals not gov’t </li></ul><ul><li>Property owned by individuals </li></ul><ul><li>Also called Capitalism </li></ul><ul><li>Unrestricted competition </li></ul>
  9. 9. American Free-Enterprise system (Capitalism) <ul><li>Goals: </li></ul><ul><li>Freedom </li></ul><ul><li>Equity - fairness </li></ul><ul><li>Growth </li></ul><ul><li>Remember – easy to start a business in a free enterprise system </li></ul><ul><li>ALSO . . . . . </li></ul>
  10. 10. Free – Enterprise Promotes. . . <ul><li>Profit – amount earned after cost to produce the product </li></ul><ul><li>Competition – rivalry among producers and sellers to win business </li></ul><ul><li>Private-Property – property owned by individuals. </li></ul><ul><li>High Standard of Living – the material well being of an individual, group or nation </li></ul><ul><li>Economic Equity attempt to balance economic policy so that it is just – and everyone benefits fairly </li></ul>
  11. 11. Mixed Economy <ul><li>Combination of market and command economy </li></ul><ul><li>Most countries have a mixed economy </li></ul><ul><li>You can own your own property </li></ul><ul><li>Most decisions are made by individuals with only a small amount of gov’t input. </li></ul>
  12. 12. Economist – Adam Smith <ul><li>Father of the “Invisible Hand” theroy?? </li></ul><ul><li>believed . . . Gov’t should not interfere in the marketplace . . . Which is Capitalism – which is another name for the ________ economy </li></ul><ul><li>Also know as laissiz-faire – where gov’t minimizes its interference in the economy. </li></ul>
  13. 13. Economist Karl Marx <ul><li>believed . . . . . </li></ul><ul><li>Capitalism would die out and pure communism (command) would replace it </li></ul>
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