Economic Systems
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Transcript of Economic Systems
Economic Systems
p.128
Country’s Systems
• Political System-how the government is set up
• Economic System- what the country produces
-who controls resources
Political Systems
• Republic/Democracy--people vote for government representatives- USA
• Constitutional Monarchy--king or queen and elected parliament- Great Britain, Spain
• Dictatorship--ruled by a single leader supported by the military, no elections-Iraq under Saddam Hussein
• Oligarchy--a group of rich people in charge, -Pakistan, Kuwait
• Anarchy-no government
Economic Systems
what the country produces and who controls resources
Traditional Economy
Based on agriculture Advantages (+)
-healthy, peaceful-subsistence farming (make everything by themselves)-no pollution-everyone has useful skills
Example-the Amish• Disadvantages (-)• poor education• hard work• little money• no technology
Communism(command economy)
Government controls all resources
Advantages (+)• safe• free college, and healthcare• equal pay
Example-N. Korea, CubaDisadvantages (-)• no private businesses• poor quality of goods• no freedom• poverty,• money spent on military
Capitalism(market economy)
Based on private property, no government control
• Advantages (+)• Businesses make lots of
money• Easy to start a business
(no country)
• Disadvantages (-)• No government regulations• Pollution• Child labor, • no minimum wages• High poverty
Mixed Marketbased on private property, and limited
government controlExample U.S.Advantages (+)• You can own a business,
and make a profit• Government collects
taxes to spend on different programs (education, seniors, military)
• Disadvantages (-)• High unemployment• Jobs outsourced to
countries with cheaper labor
• Expensive colleges, • Expensive healthcare
The U.S. Economic System p.131• 1. private property-
-we can own a house, land• 2. freedom of choice-
-we can buy at different stores• 3. freedom of enterprise-
-we can own a business• 4. limited government control-
-government collects taxes, and regulates businesses (no child labor, minimum wages, no pollution)
Factors of Production p.133
• Land
• Labor-workers
• Capital- money
• Entrepreneurs-businessmen
• Technology
Prices in a Free MarketLaw of Supply and Demand
• Goods on the market what people want to buy
• Supply___ Prices____ Supply___Prices___
• Demand__Prices____ Demand_ Prices___
• Competition__Prices__ Quality___
The Business Cycle
Prosperity (high production)
» recession (U.S.)• (slow down in the economy)
expansiondepression
Production Unemployment rate (%)- 8% -US 20128 people out of 100 don’t have jobsThe Great Depression-1929-1939 25% unemployment
Deficit and Debt p. 162Budget- plan how much $ we can save and spend
Income=Expenses=Balanced
Budget
Income> Expenses=Budget
Surplus
• Income< Expenses=Budget
Deficit
Trade-buying and selling goods
• Exports=Imports=Balance of Trade
• Exports> Imports=Trade Surplus• Exports< Imports=Trade Deficit
• Free Trade-trading with other countries without paying tariffs (taxes on imported goods)
Assignments
• Workbook p. 43,45,46• Articles-North Korea, Cuba