2-Understanding Economic Systems

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Understanding Economic

Systems

MINISTRY OF FOREIGN AFFAIRS

THE UNIVERSITY OF WORL E!ONOMY

AN I"LOMA!Y

WORL E!ONOMY

S#$er%isor& Isad'ano% A(

)st year Masters st#dent& *arimo%a *+(


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Warm Up Question #1

What standard of living do youhope to attain in life? How doyou plan to accomplish thisgoal?


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Main IdeaEconomies vary when it comes to

government involvement !herelationship "etween government andthe economy has "een de"ated sincemerica$s historical "eginnings


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Essential Question

W h a t r o

l e s h o u l d a g o v e

r n m e n t

p l a y i

n a n e c o

n o m y ?


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I Understanding Economic %ystems

Economics & the social science thatanaly'es the production( distri"ution(and consumption of goods and services

) Many di*erent economic systems inthe world

+ Helps formulate our understanding ofModern merican History


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Economies of the World ,-../

ccording to this map( which are amongst the world$s wealthiestnations?


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%ystems

n economic system in whichfactories( e0uipment( or other means

of production are privately ownedrather than controlled "y thegovernment

)Eample & United %tate of merica

+apitalism


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2aisse',3aire !he idea that the free

mar4et( through supply anddemand ( will regulate itself

if government does notinterfere

) 5overnment should "e“hands of” with "ig

"usiness+ Highest form of capitalism

6 E 7ise of Industry in

merica in 18th

+entury

9ohn 67oc4efeller founderof%tandard:il had a

net worthof ;


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%upply 6emand !he way a mar4et regulates itself in a capitalist

society

) In your %ocial %tudies 9ournal add the followingvisuali'ation

+ %o how does this wor4?

apitalism =continued>


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%ocialism political and economic

theory that advocatesownership of the meansof production( such as

factories and farms( "ythe people rather than"y capitalists and landowners

) @ower "elongs to thewor4ing class

+ E & +hina( Augoslavia=parts of U%%7>

!he sym"ol of the%oviet Union featured

the hammer and sic4lesym"ols of la"orers for


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+ommunism n economic or political system in

which the state or the communityowns all property and the means ofproduction( and all citi'ens share the

wealth) +reates a classless society

=theoretically

+ E & Bietnam( +u"a( U%%7


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Capitalism(Marketeconomy)

Socialism(mixed economy)

Communism (Commandeconomy)

:wnershipand control

+ompetition

%tandard of2iving

•Individualscontrol means ofproduction•Mar4etdetermines what

goods will "e soldat what price•+ompetition

4eeps prices lowand 0uality high

•high standard ofliving andeconomicsecurity•Individuals free

to earn proCts("ut may ris4

•)asic means ofproduction owned

and managed "y

government

•@rivate ownership(

with regulation( of"usinesses+ooperation

stressed over

competition

•high standard of

living and economic

security

•High taes provide

free health care andeducation

5overnment owns

means of production

5overnment

determines what

goods will "e sold at

what price

Do competition( lower

0uality goods

5oal is e0uality for

every"ody( enforced

"y the government


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Economic %cenariosWor4 with your ta"le groups to

demonstrate your understanding ofeconomies

naly'e the following scenarios and thenidentify the type of economy that is "eingdescri"ed in the statement


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%cenario #1In this economy

manufactures ofautomo"iles

control thenum"er ofvehicles

produced eachmonth in a e*ortto avoidsurpluses thatwould minimi'e


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%cenario #-In this economy( the

governmentproduces it$s

signature cra"avored soft drin4and determines that

it will "e sold for;1-F in all stores


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%cenario #GIn this economy(

investors can ma4emillions investing in

the construction ofnew homes( "ut it is

ust as li4ely that the

value of theseproperties coulddecrease "y .J andthey will lose millionsof dollars


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%cenario #

In this economy(unemployment isaround GJ and

although taes arehigh( all mem"ers ofthe society have

access to goodschools and hospitals


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%cenario #F

In this economy(there are only Gtypes ofautomo"iles tochoose from

!hey often "rea4down and they areall painted a light"rown color


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%cenario #<

In this economy(you are the ownerof construction

company( "ut allyour materials to"uild houses is

regulated "y thegovernment toensure safe

housing for all


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%cenario #K

In this economy( thevalue of goodsuctuates greatly and

as a company youmust continue toproduce 0uality goods(

or ris4 "eing out of"usiness


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&6emand

!hese concepts are comple( yet

understanding them is essential to ourdiscourse this year

With the time remaining in class( I amas4ing you to create a visual reminder(

with your ta"le group for supply

%upply

%upply

6emand

6emand

; @rice ;

; @rice ;

; @rice ;

; @rice ;


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merica$s Mied Economy

• Wor4 with your ta"le group toread the article a"outmerica$s current miedeconomy

• 7espond to the essential

0uestions after reading• +lass discussion to follow


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7eferencesLhttpsLwwwgooglerourl?

saNtrctN0NesrcNssourceNwe"cdNFcadNrauactN/vedN.ahUOEwip


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!han4 youSSS

2-Understanding Economic Systems

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