Economic Systems of the World.

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Economic Systems of the World.
Traditional Market Command

• What are the major types of Economic systems ?
• How does each answer the 3 Basic Economic
  Questions?

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Three Economic Questions

• What goods and services will be produced?
• What do we have?
• How will they be produced?
• Hand gt machine gt elsewhere
• Who gets the stuff?

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3 Economic Systems

• Economic system (economy) an organized way of
  providing for the wants and needs of people.
• 1). Command
• 2). Market
• 3). Traditional

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Traditional Economic Systems
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Tradition, Tradition, Tradition

• What, how and for whom to produce are answered by
  ritual, habits, customs
• Tribal Societies Across the world
• Communal living, little private property
• Advantages Disadvantages
• Methods Work Subsistence
  living
• Everyone knows Role Low standard of
  living
• Life is predictable and Discourages new
  ideas
• stable
  Never changes

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Time to Get Creative!!!!!

• Describe what each of the following would look
  like in a traditional economy
• Waking up in the morning
• You and your friends hangout in the afternoon
• Going to get food for dinner

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Communism Command

• Govt answers 3 Basic Economic Questions
• No Private Property Rights
• Total Government Control
• Government owns all resources!!!!!

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Command Economies - Pros

• Allows an economy to change direction very
  quickly.
• After Stalins first two Five Year Plans, Russia
  moved from a rural agricultural economy to an
  industrial economy.

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Command Economies - Pros

• Little uncertainty as to who will do what.
• No unemployment because the government gives
  everyone a job (whether it is needed or not).
• Ayn Rand - Anthem

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Command Economies - Cons

• Not designed to meet the wants of consumers.
• Stalins Five Year Plan directed resources away
  from both agriculture and consumer goods.
• Provides strange incentives
• Do just enough to meet quotas.

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Command Economies More Cons

• No rewards for individual performance.
• No flexibility to handle problems.
• Requires a large decision making agency.

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Circle the words that fit with Command Economies

• Lots of Choices Government housing
• Economic freedom Central planning
• Merit Pay Cuba
• Incentives to work Basic needs met
• Get what you need Slow to change
• No Technology Equal
  distribution of wealth
• Happy Consumers Government control
• Private Property Fast to
  change
• Day to day flexibility Tribes
• North Korea

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Expansion of Communism

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Stop, Collaborate and Listen

• What are the similarities and differences of
  Traditional and Command Economies?

Traditional
Command
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Market Economy Capitalism
USA, Japan, UK, South Korea, South Africa, Canada
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Market economies Capitalism

• People/individuals answer the What, How, For Whom
  to Produce
• The First Economist Adam Smith
• laissez faire leave it alone
• Invisible hand of self interest

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Market Economies - Pros

• Economy can adjust to change over time
• Businesses can adapt to changing consumer tastes
  by creating new/different products.
• High degree of individual freedom
• Businesses and individuals are free to do what
  they want.

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Market Economies More Pros

• Small degree of government interference (Mixed
  Economy)
• Economic decisions are made by all, not limited
  to government officials.
• Seemingly unlimited variety of goods and services
  available to consumers.

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Market Economies - Cons

• Does not provide for the basic needs of everyone.
• Elderly, disabled and other groups would be
  unable to survive in a market economy without
  governmental assistance.

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Market Economies More Cons

• High degree of uncertainty
• Tommy Boy
• Jobs going overseas
• Market Failures

• Does not provide certain services that people
  value.
• National Defense Education.

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What 3 economic questions are asked when studying
the similarities of a traditional, command and
market economy among nations of the world? A.
What to produce, why to produce, when to produce?
B. What is your opportunity cost, what economic
resources are needed, why should these resources
be used? C. What to produce, how to produce, and
for whom to produce?D. What is your opportunity
cost, why are economic resources needed, when
should these resources be used?
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When a country has a market economy, which of
these statements correctly defines this system?
A. Workers are guaranteed a pay raise every
year. B. The government controls most of the
businesses in the country. C. Basic goods in the
country are provided to all people without
charge. D. Companies produce goods of their
choice and consumers decide whether to buy the
goods.
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• Which term best describes an economic system in
  which the peoplenot the governmentown land,
  factories, and
• businesses?
• Communism
• B. Market
• C. Command
• D. Traditional

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• In a traditional economic system people usually
  exchange goods or services rather than use money.
  Which of the following is an example of this
  exchange process?
• charging goods on a credit card
• B. bartering with a seller
• C. paying for services by check
• D. using currency to pay

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• In which economic system are the production and
  distribution of goods owned by private
  individuals or corporations?
• traditional
• B. feudalism
• C. market
• D. command

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• Which of following best
• describes a market economy?
• A person can start any legal business and charge
  any price.
• B. The government provides food and housing
• to all workers.
• C. The government provides services, such as
• telephones and television.
• D. National businesses, such as airlines, are
• owned by the government.

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• A market economy is very different from a command
  economy. Which of the following is found in a
  market economy?
• Competition
• B. guaranteed yearly pay raises
• C. government control of industry
• D. government control of agriculture

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• In which economic system does a single authority
  decide what is produced?
• traditional
• B. Command
• C. Market
• D. Public

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Which of the following explanations would
reflect a country with a mixed economy (i.e.,
between a pure market and pure command)? A.
Prices and wages are solely regulated by a
countrys government. B. A combination of
privately-owned industry and government
control. C. A countrys distribution of resources
is based on inheritance. D. Prices and wages are
determined by the laws of supply and demand
rather than being regulated by a countrys
government.
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• The economic system of communist countries is
  most closely related to which of the following?
• command
• B. market
• C. traditional
• D. supply and demand

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