ASIAECONOMIC UNDERSTANDINGS Four Basic Economic Systems(India, China, Japan, North & South Korea) STANDARD: SS7E8a.b

ASIAECONOMIC UNDERSTANDINGSStandard: SS7E8 – The student will

analyze different economic systems.a. Compare how Traditional,

Command, and Market economies answer the three economic questions of (1) What to produce, (2) How to produce, and (3) for Whom to produce.

FIRST FIVEAgenda Message: Before-school tutoring tomorrow, Tuesday

starting at 7:30a. Social Studies Progress reports will be sent home Friday.

Standard: Analyze different economic systems by comparing how Traditional, Command, and Market economies answer the three basic economic questions.

Essential Question: Monday, March 3rd; What are the 3-Basic Economic Questions that All economies must answer?

Warm-Up: What are two additional names for a Market Economy?

Today We Will:1. Review 3-Basic Economic Questions & Four Types of Economies2. The variety economies in India, China, Japan, & North Korea

ANSWERSE.Q. Answer for Monday March 3rd:1. What goods and services will be

produced?2. How will the goods and services be

produced?3. Who will use the goods and services that

will be produced?

Warm-up Answer:Liaise-faire, Capitalism, or Free Enterprise

FIRST FIVEAgenda Message: After-school tutoring tomorrow, Wednesday 4:00-5p.

Social Studies Progress reports will be sent home Friday.

Standard: Analyze different economic systems by comparing how Traditional, Command, and Market economies answer the three basic economic questions.

Essential Question: Tuesday, March 4th; Why do most countries in the world today operate somewhere between a Market economy and a Command economy?

Warm-Up: Who takes the financial risk in starting a new business in a market or mixed-market economy?

Today We Will:1. Review 3-Basic Economic Questions & Four Types of Economies2. The variety of economies in India, China, Japan, & North Korea

ANSWERSE.Q. Answer for Tuesday March 4th:Most economies have found that they need a mix of free market and some government control to be successful and to protect consumers.

Warm-Up Answer:Individual business people known as entrepreneurs.

ASIAECONOMIC UNDERSTANDINGS

ReviewEvery society must deal with providing goods

and services for its people.

Each society must also develop an economic system that can decide how to use the limited resources at its disposal in order to provide goods and services for its people.

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Three basic “Economic” questions must be answered:

1. What goods and services will be produced?

2. How will goods and services be produced?

3. Who uses the goods and services that are produced?

ASIAECONOMIC UNDERSTANDINGS

TRADITIONAL ECONOMY

In a Traditional Economy, most of the economic decisions are made based on custom and habit, or how such decisions were made in the past.

Goods and services are exchanged instead of using money as a payment in a traditional economy. This is also known as bartering.

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“No country today can be described as having a traditional economy.”

COMMAND ECONOMYA Command Economy is one in which

government planning groups make “all” of the 3-basic economic decisions for the workers.

The best example of a command economy in Southern and Eastern Asia is North Korea.

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In North Korea the government owns nearly all the important industries, factories, and businesses.

China is ChangingChina was set up along a command economic

system in the 1950’s after the communist revolution, however now the country is beginning to make exceptions to the rule of government control.

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MARKET ECONOMY

The next basic type of economic system is a Market Economy. In a market economy, economic decisions are made by individuals (the consumers) who decide what to produce and what to buy.

Other names for a market economy are capitalism, free enterprise, or laissez-faire.

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EntrepreneursIn a market economy, individuals who want to

start a business may do so. They take economic risk as they invest in their new business.

If the new businesses are successful, the people who organized and funded it will be a success and make a profit.

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If the businesses fail, the investors will lose money.

Japan and South Korea have a market economy or free enterprise economic systems.

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Standard: SS7E8 – The student will analyze different economic systems.

b. Explain how most countries have a mixed economy located on a continuum between “pure” market and “pure” command.

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A MIXED ECONOMY

Nearly all countries today have mixed economies. In other words, they have characteristics of a free market and free enterprise as well as some government planning and control.

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Today, no countries in the world have economic systems that are purely traditional, purely command, or purely market systems.

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Economic Variety

There are a variety of economic systems in Asia. Examples include China, North Korea, Japan, and India.

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China

China calls it’s economy a “socialist market economy.” Basically, China is changing from a command economy completely controlled by the Chinese Communist government to a mixed market economy overseen by the Chinese government.

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To improve its economic growth, China’s government mixed in components of a market economy during the last 25 years.

Those reforms have led to excellent growth in the Chinese economy.

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China is gradually reducing government control and allowing more foreign investment. Economist predict that China may lead the world in economic strength (GDP) within the next 20 years!

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North Korea

North Korea has a command economy controlled by its Communist government. Government planning groups control all the resources and decide what will be produced and how.

Farmers work on cooperatives where up to 300 families share the work.

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Unfortunately, the North Korean economy has serious problems and the government is making some reforms and relaxing some of its controls.

Due to it’s poor performing economy, massive food aid from other countries have been needed to avoid widespread starvation in North Korea.

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Japan

Japan has a mixed market economy which is one of the strongest economies in the world! With few natural resources and little farmland, Japan has built its economic success around manufacturing (especially cars and electronics).

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Japan imports raw materials, uses them to manufacture goods like ships, cars, and electronics, and exports those goods around the world.

The Japanese government owns few businesses other than the country’s major TV network, but does oversee many aspects of the economy like banking and trade.

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India

India has a mixed economy that is moving away from a command system.

After independence in 1947, India’s government set up a command economy where it controlled industries and production.

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In 1991, India began to lift some government control and allow citizens a role in running some of India’s industries.

Although these reforms have been good for India’s economy, millions of India’s people still live in extreme poverty.