Post on 18-Aug-2015
Comparing Economic Systems
Economics is the study of …?
• How a country chooses to satisfy its’ unlimited wants and needs with its’ limited resources
Resources
• Food
• Energy
• Labor
• Raw Materials
• Services
An economic system is
• The system or way a country chooses to use and distribute…(see above slide)
• Capitalism
• Socialism
• Communism
Capitalism
• An economic system based on private ownership of productive property (farmers fields, gold, natural resources) U.S., Germany and Japan
Four Factors of Production
• Land – resources
• Labor - work
• Management (MGMT) – organize and decide
• Capital - $ and machinery
Capitalist
• Has capital and puts it to productive use
• Another name for a capitalist economy
• Free-Enterprise system
• People are free to start and run businesses
• Five characteristics of a free enterprise system
• private ownership– individuals or groups own most of the means
of production
• guarantee of property rights– right to own property
• private decision makers– decisions of what to produce left individuals
and companies– decisions of how to produce left individuals
and companies
• competition– businesses compete with one another– law of supply and demand
• freedom of choice– consumers can choose from many products
and services
• Does the United States really a capitalist economy?
• Are we really free to do whatever we want with our productive property?
Mixed Economy
• Why is the U.S. called, a mixed economy?
• Private business and the government play a part in the economic system
• Regulation of business – cars – seatbelts• Government runs business• Government grants license or utility –
PECO, Comcast, Pa American Water Company
Partnership
Corporation
• 80% of U.S. business are small businesses
Time for the Quiz
AP Government Chapter 1 Text Question
• James Madison, wrote” If men were angels, no government would be necessary. If angels were to govern men, neither external or internal controls on government would be necessary.” Explain what this quote means and what kind of controls Madison put into the Constitution a a consequence of his beliefs.