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Econ systems

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  • 1. Economic Systems
  • 2. Government does not interfere - Consumers and entrepreneurs decide what, how, and for whom to produce – supply & demand
    Democracy – direct
    Authoritarian – dictatorship, communist (government ownership)
    Government has complete authority to decide what, how and for whom to produce – jobs, prices, organization, housing
    Government decisions are based on traditions and customs which determine what, how and for whom to produce
    Oligarchy – military or religious group; tribal communities
    Contains a mix or combination of any of the above economies – Government does make some economic decisions (taxes, social programs)
    Democracy – representative, parliamentary, presidential, socialist
  • 3. Tribal communities, Native Americans, the Amish
    Things are done as they were in the past based on tradition, customs or religion
    Government controls the factors of production and makes all economic decisions
    The former Soviet Union, North Korea, Cuba
    Individuals own the factors of production and consumers, they make decisions without government intervention
    Great Britain in the 1800s; “Black Market” (unregulated economy)
    Contains elements of traditional, command and market systems; government does regulate some areas of business
    USA, Great Britain today, Russia today, Canada
  • 4. Traditional Economy
    In a pure traditional system, the customs and traditions of that culture help answer the three basic economic questions. Longstanding beliefs (customs) create the rules for all economic activity. Religion often plays an important role in a traditional economy.
    What to Produce? – By custom; the same goods and services that were produced in the past will continue to be produced.
    How to Produce? – By custom; goods and services will continue to be manufactured, grown and distributed in the same way as before.
    For Whom to Produce?– By custom; whoever received goods and services in the past will continue to receive them.
    Examples: Under-developed countries or tribes that have been isolated from the rest of the world [Eskimos in Alaska, Rainforest tribes in South America]
  • 5. Economic Systems
    The government decides what should be produced – government owns the means to production
    By custom – whatever was produced in the past
    Consumer choices determine the success of goods/services
    The government does the planning for production: factory locations, decides jobs and salaries, prices on goods
    By custom – however items were produced in the past
    Business leaders choose the means of production – The goal is efficiency and making a profit
    By custom - whoever usually received goods will receive them again
    The government controls distribution of goods/services: housing locations, transportation system
    The consumers’ income or wealth determines who receives which goods/services
  • 6. American GovernmentUnit 1: Types of Government & Economic Systems
    Matching:
    Mixed Economy___
    Traditional Economy___
    Command Economy___
    Market Economy___
    Religious or military leaders
    Government does not interfere
    Most systems today
    Central Authority Decides
    C
    A
    D
    B
  • 7. Economic Systems
    DRILL
    Fill in the blanks below with the correct Economic System or Type of Government:
    Command = ________________
    ________________ = Oligarchy
    Market = ________________
    ____________ = Representative Democracy
    Authoritarian
    Traditional
    Democracy (direct)
    Mixed
  • 8. Economic Systems
    Identify the type of economic system:
    Congress passes a law to control the rising cost of prescription drugs. _____________
    Entrepreneurs were jailed in the former Soviet Union. ______________
    Mixed Economy
    Command Economy