The 4 Primary Economic Systems - Tamalpais Union High ...
Transcript of The 4 Primary Economic Systems - Tamalpais Union High ...
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The 4 Primary
Economic Systems
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Which goals will be given priority?
• Growth—maximizing
production of goods & services
• Employment—making
sure everyone has a job
• Efficiency—getting the
most production out of the
resources you’ve got
• Stability—No fast or
disruptive changes
(GEES)
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1. Traditional
How to produce
• Growth
• Employment
• Efficiency
• Stability
Based on Need
What to produce and for whom?
African Tribes
Amish
Native Americans
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2. Command
Government Planning
What to produce and for whom?
How to produce
• Growth
• Employment
• Efficiency
• Stability
Collectivized Agriculture in China
Government Ownership of Industry
Soviet Politburo—made all decisions
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Countries that have been
communist at one point in time
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3. Capitalist
Supply & Demand/Price
What to produce and for whom?
How to produce
• Growth
• Employment
• Efficiency
• Stability
New York Stock Exchange
Hong Kong Consumerism
Competition
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Adam Smith (1723-90)
• Argued: Free markets best
promote the social welfare
Wrote “The Wealth of Nations”
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This map shows countries (in white) that
England has never invaded. There are
only 22 of them.
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Adam Smith & The Invisible Hand
Law of the Market #1: People follow their own SELF-INTEREST
Therefore: Markets are self-regulating
Government
should not
Interfere!
Law of the Market #2: Competition keeps
them in check
--market runs as if directed
by an invisible hand
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4. Mixed/Socialist
Mostly Supply & Demand, Part Gov’t Planning
What to produce and for whom?
How to produce
• Growth
• Employment
• Efficiency
• Stability
French National Transportation system
British National Health
System (NHS) Hospital
Danish University system
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