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Transcript of economic systems
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REPORTER:
CEDRON, SHIELA G.
ECONOMIC SYSTEMS
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ECONOMIC SYSTEMS
Economic system is a system adopted by a society that organizes the production, distribution and consumption of goods and services.
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ECONOMIC SYSTEMS
An economic system is a set of economic institutions that dominates a given economy.
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What is the principal objective of an economic system?
to solve the basic economic problems
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What?.
How?.
Who/m?.
Basic economic questions
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4 Main types of Economic System :
• Traditional Economic System
• Market Economy• Command Economy• Mixed Economy
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TRADITIONAL ECONOMY SYSTEM
• Economic decisions are made based on customs and traditions.
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agrarian community
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agrarian community
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Characteristics:
• It is based on agriculture, fishing, hunting, gathering or combination.
• It is guided by traditions• It may use barter instead
of money
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Advantage:
• Traditional economies are usually less destructive to the environment, and are therefore sustainable.
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Disadvantage:
• Very vulnerable to changes in nature, especially the weather.
• They are more vulnerable to market or command economies that have superior resources to wage or take away needed natural resources.
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MARKET ECONOMY
• Economic decisions are made by the market system or simply the demand and supply condition.
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Characteristics:
• Private property• Freedom of choices• Motive of self-interest• Competition• System of markets and
prices
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Advantage:
• It ensures the most desired goods and services are produced
• Good and services are produced in the most efficient way possible.
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Advantage:
• Innovation is rewarded.
• The businesses and individuals who are most efficient and innovative will accumulate more capital.
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Disadvantage:
• A market economy functions through competition.
• Rewards those who are good at being competitive.
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COMMAND ECONOMY
• Economic decisions are made by the government.
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Characteristics:
• The government creates a central economic plan for all sectors and regions of the country.
• The government allocates all resources according to the central plan.
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Characteristics:• The central plan sets the
priorities for production of all goods and services.
• The government owns a monopoly business in industries deemed important to the goals of the economy.
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Characteristics:
• The government creates the laws that regulate economic activity.
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Advantage:
• Centrally planned economies are great at mobilizing economic resources quickly, effectively and on a large scale.
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Advantage:
• Command economies are also good at wholly transforming societies to conform to the planner's vision
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Disadvantage:
• Command economies mow down other societal needs.
• Command economies often produce too much of one thing and not enough of another.
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Disadvantage:
• Command economies are not good at stimulating innovation.
• Centrally planned economies also have trouble producing the right exports at global market prices.
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MIXED ECONOMY
• A mixed economy seeks to have all the advantages of a market, command and traditional economy with little of the disadvantages.
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Characteristics:
• Most allow government to have a command role in areas that safeguard the people and the market itself.
• Most mixed economies follow traditions that have been so ingrained that they may not even be aware of it.
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Characteristics:
• The global economy is primarily free-market based. There is very little government control, although some regulations and agreements have been put into place.
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Bibliography:
• Camba, Aileen L., Maniego, Norie L., Ronan, Jose R., Payumo, Casiana Salud., “Understanding Economics”
• Gabay, Bon Kristoffer G., Remotin, Roberto M. Jr., Uy, Edgar Allan M., “Economics: Its Concepts & Principles (with Agrarian Reform & Taxation)” 2007
• Tullao, Tereso S. Jr., “Understanding Economics in the Philippine Setting”, Phoenix Publishing House 2002
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next is…….“Economic Goals”“Economic Goals”