Types of EconomiesTypes of Economies

Basic Decisions To Be MadeBasic Decisions To Be Made

How much freedom should How much freedom should the citizens have to make the citizens have to make decisions on their own?decisions on their own?

Citizens and leaders have to Citizens and leaders have to decide what goods will be decide what goods will be produced or services will be produced or services will be providedprovided

Difficult question of how the Difficult question of how the goods are to distributed goods are to distributed

Economic SystemEconomic System: : organized set of procedures organized set of procedures and practices that a society and practices that a society follows in the production and follows in the production and distribution of goods and distribution of goods and servicesservices

4 Types of Economic Systems4 Types of Economic Systems

TraditionalTraditional Economy: Economy: relies relies on customson customs

Customs, religion, and laws aid in Customs, religion, and laws aid in the passing of skills from parent the passing of skills from parent to childto child

Change happens slowly because Change happens slowly because people are reluctant to move people are reluctant to move from how things were done in from how things were done in the pastthe past

Some of these systems still Some of these systems still exist in Africa, Latin America, exist in Africa, Latin America, and the Middle Eastand the Middle East

Command EconomiesCommand Economies: rely : rely on powerful government on powerful government officials, often named central officials, often named central planners, to make economic planners, to make economic decisionsdecisions

Decide on how goods will be Decide on how goods will be produced and how much of produced and how much of each will end up in the hands each will end up in the hands of the citizensof the citizens

Individual citizen usually has Individual citizen usually has to defer to the leaders on to defer to the leaders on most economic mattersmost economic matters

Ancient Egypt, the pharaoh Ancient Egypt, the pharaoh controlled all aspects of controlled all aspects of production and distributionproduction and distribution

Owned all of the land and Owned all of the land and collected all of the taxescollected all of the taxes

European Middle Ages- lords European Middle Ages- lords of the manor exercised similar of the manor exercised similar powerpower

Pure Market Economy:Pure Market Economy: relies on the individual to relies on the individual to make the economic decisionsmake the economic decisions

Government has little say in Government has little say in what is produced, sold, or what is produced, sold, or consumedconsumed

System relies on the “market” System relies on the “market” to provide enough resources to provide enough resources to keep things goingto keep things going

A market is where goods and A market is where goods and services are exchanged services are exchanged freely. freely.

People are motivated by self-People are motivated by self-interestinterest

Mixed Economies:Mixed Economies: economies of today are economies of today are classified this way, because classified this way, because they combine aspects of the they combine aspects of the pure market and command pure market and command systemssystems

Capitalist:Capitalist: United States United States Individuals own and control Individuals own and control

the resources, but the the resources, but the government does have some government does have some control of the economy control of the economy through taxation and through taxation and regulationsregulations

Nations that are closer to the Nations that are closer to the command style economy are command style economy are known as known as authoritarian authoritarian socialist socialist or or communistcommunist

Government controls all of Government controls all of the resources and makes all the resources and makes all economic decisionseconomic decisions

Cuba is an example of a Cuba is an example of a communist country- communist country- individuals are starting to individuals are starting to make more economic make more economic decisions for themselvesdecisions for themselves

Evaluate the economic Evaluate the economic system of the United States. system of the United States. List and explain a few of its List and explain a few of its strengths and weaknesses.strengths and weaknesses.

Strengths: Strengths: Diversity of peopleDiversity of people Large amounts of capitalLarge amounts of capital Freedom of movement and Freedom of movement and

speechspeech

Weaknesses:Weaknesses: Trade deficitTrade deficit Lack of savingsLack of savings Distribution of wealthDistribution of wealth

Who Gets What and Why?Who Gets What and Why?

United States has less than United States has less than 5% of the world’s population5% of the world’s population

We consume over 1/3 of the We consume over 1/3 of the world’s food.world’s food.

How is that possible?How is that possible? Is there a lot of waste Is there a lot of waste

involved?involved?

How did we gain such How did we gain such prominence?prominence?

How do we maintain such How do we maintain such control?control?

Microeconomics:Microeconomics: decisions decisions made by individuals and made by individuals and businessesbusinesses

Macroeconomics:Macroeconomics: economics economics on a national or global scale- on a national or global scale- you would study this if you you would study this if you wanted to know how our wanted to know how our national govt uses its national govt uses its resourcesresources

Learning how to make a small Learning how to make a small business run more efficiently business run more efficiently would be by studying would be by studying microeconomicsmicroeconomics

If you are going to major in If you are going to major in business, you will have to business, you will have to take both macro and microtake both macro and micro

How can the United States How can the United States control so much of the control so much of the world’s resources? Why do world’s resources? Why do we have it so good?we have it so good?

We have a good standard of We have a good standard of living because we produce so living because we produce so much surplus wealthmuch surplus wealth

We are the world’s primary We are the world’s primary economic power because for economic power because for the last two centuries, we have the last two centuries, we have had a legacy of economic had a legacy of economic freedom that allowed capital freedom that allowed capital to be used by entrepreneurs in to be used by entrepreneurs in order to innovate and excelorder to innovate and excel

Quiz Friday over the last two Quiz Friday over the last two PowerPointsPowerPoints

Current event due FridayCurrent event due Friday Extra credit for a current Extra credit for a current

event that is about any of the event that is about any of the material from this week of material from this week of notesnotes