Agenda

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Agenda

• Bellringer/Review Activity
• Notes Economic Systems
• Should the US become more socialist?

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Practice identify FOP

• Tools you own?
• Area in yard where you plant vegetables?
• Lawn mower to cut grass?
• Workers hired to plant beds?
• Knowledge and skills from college?
• Water and fertilizer used in garden?
• Combining all elements to begin landscape biz?
• Effort you exert in tending your garden?
• What does Guns and Butter model depict?

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Target Economic systems

• Essential Learning Economic systems and theorists

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Objectives

• Students will demonstrate an understanding of the
  Big Three economic questions and how they apply
  to the four economic types

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The Big Three Questions

• Every economic system in the world, past and
  present, has to answer these three questions
• What to produce? (How did economists answer this
  question?)
• For whom to produce it?
• How to produce it? (Who owns the factors of
  production?)

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4 Different Economic Systems

• Traditional
• Command/Socialism
• Capitalism/Market
• Mixed

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Traditional Economic System

• Economic system is based on customs and
  traditions (handed down from 1 generation to
  another).
• Allocation of scarce resources stems from ritual,
  habit, or customs
• BARTER!! Means trade! No money!
• Examples Africa, parts of India, the Australian
  Aborigines

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Examples of Traditional Economies

• Aborigines
• Inuits

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Advantages Disadvantages

• Economic roles are set
• Stable, predictable, and continuous

• Discourages new ideas
• Lack of progress
• Lower standard of living

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Does a traditional economy answer the big three
questions?

• What will be produced?
• Whatever tradition, values, and rituals dictate
• How will it be produced?
• However tradition, values, and rituals dictate
• For whom will it be produced?
• Whomever tradition, values and rituals dictate

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Command Economy

• A central authority (government) has to answer
  the big three questions
• Government decides the needs of the people, the
  best way to produce it and for everyone!

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Command Economy

• There is very little if any input from the
• people.
• Examples North Korea, Cuba, China

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Advantages Disadvantages

• Basic Needs taken care of
• Education, public health, other services cost
  very little if anything
• Very little unemployment

• Doesnt meet wants
• No incentives
• Requires a large bureaucracy
• New and different ideas are discouraged
• No room for individuality

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Does a command economy answer the big three
questions?

• What is being produced?
• Whatever the government decides
• How is it being produced?
• The government will tell someone to make it
• For whom is it being produced?
• Whomever the government decides needs it

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Capitalism/Market

• System that relies on consumption choices made by
  consumers
• Consumers dictate what is produced, how much is
  produced, and how much things cost

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Capitalism/Market

• Examples Canada, South Korea, Singapore,
  Germany, Great Britain, and the UNITED STATES!

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Advantages Disadvantages

• Individual Freedom for all
• Lack of government interference
• Incredible variety to choose from
• High degree of consumer satisfaction

• Rewards only productive people
• Workers and businesses face uncertainty
  (Competition)
• Not enough public goods (Education, health,
  defense)
• Unemployment
• Must guard against market failure

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Answer the big three

• What will be produced?
• Whatever the consumer wants
• How will it be produced?
• Entrepreneurs will respond to demand
• For whom will it be produced?
• Whomever is willing to work for it (or afford it)

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Mixed Economy

• A mix of all of the other three economies
• Some government involvement, consumer driven,
  aspects of economy based on traditional values
• This is really what the US is.
• Examples Obama Care, Bail outs yet consumer
  driven. Family owned stores and corporations.

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Create a graphic organizer to help you remember
each system
Market
Command
Mixed
Traditional
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Or maybe this
Traditional Command Market Mixed

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Classwork/Homework

• In a formal paragraph, tell me which economic
  system you believe is the best. Consider your
  needs and wants. All systems had their advantages
  and disadvantages which one do you support?