ECONOMIC ECONOMIC SYSTEMSSYSTEMSWHAT ARE THEY?WHAT ARE THEY?WHAT PURPOSE DO THEY WHAT PURPOSE DO THEY SERVE?SERVE?

A. Economic SystemsA. Economic Systems1. 1. TraditionalTraditional = past ways and beliefs determine = past ways and beliefs determine

what goods and service should be what goods and service should be producedproduced

2. 2. MarketMarket = the government has little or no say = the government has little or no say in what can be producedin what can be produced

3.3. CommandCommand = the government controls the = the government controls the economy and decides what goods and economy and decides what goods and services should be producedservices should be produced

4.4. MixedMixed = the government has some control in = the government has some control in order to keep the economy healthyorder to keep the economy healthy

A. Continued…….A. Continued…….

5. All must answer 3 basic questions:5. All must answer 3 basic questions: What goods and services should be What goods and services should be

produced?produced? How should they be produced?How should they be produced? Who should get the goods and services? Who should get the goods and services?

B. TraditionalB. Traditional

1. People willingly share and trade basic 1. People willingly share and trade basic goods and servicesgoods and services

2. Tradition sets the way for what and how 2. Tradition sets the way for what and how goods and services are producedgoods and services are produced

C. MarketC. Market1. Also known as Capitalism1. Also known as Capitalism2. Producers are free to produce and sell 2. Producers are free to produce and sell

however they wishhowever they wish3. Buyers have the freedom to buy or not to buy 3. Buyers have the freedom to buy or not to buy

goods or servicesgoods or services4. Buyers help answer these 3 questions: what, 4. Buyers help answer these 3 questions: what,

how and for whom?how and for whom?5. The goods and services are based on 5. The goods and services are based on

consumer buying decisionsconsumer buying decisions

C. Continued……C. Continued……

6. The government has little say in what is 6. The government has little say in what is producedproduced

7. People can own property and businesses7. People can own property and businesses8. People can run any business within the law 8. People can run any business within the law

and are free to compete with alland are free to compete with all9.9. People are free to make economic choicesPeople are free to make economic choices10.10. Businesses are allowed to succeed Businesses are allowed to succeed

(make a profit!)(make a profit!)

TRUE MARKET SYSTEM….TRUE MARKET SYSTEM….

D. CommandD. Command

1. The government controls what is 1. The government controls what is produced and how things are produced and how things are distributeddistributed

2.2. The government sets prices on most The government sets prices on most goods and servicesgoods and services

3. Socialism and Communism 3. Socialism and Communism

E. Mixed E. Mixed

1. Most countries have mixed economies 1. Most countries have mixed economies (even the US to a degree)(even the US to a degree)

2. The government has some say in what 2. The government has some say in what is produced!is produced!

F. Goals of Economic F. Goals of Economic SystemsSystems

1. Economies should be free, growing and 1. Economies should be free, growing and securesecure

2. New and better goods are constantly being 2. New and better goods are constantly being producedproduced

3. Jobs give people the ability to buy goods and 3. Jobs give people the ability to buy goods and services and pay taxesservices and pay taxes

4. Standard of living will be high for citizens4. Standard of living will be high for citizens(Standard of living = the availability and (Standard of living = the availability and

quality of goods produced)quality of goods produced)

THE LIGHTER SIDE …….THE LIGHTER SIDE …….

G. Karl MarxG. Karl Marx1. Believed capitalism would collapse as poor 1. Believed capitalism would collapse as poor

workers would rise up and overthrow the workers would rise up and overthrow the wealthywealthy

2. Communism – the factors of production would 2. Communism – the factors of production would be owned by everyonebe owned by everyone

3. People would produce according to their 3. People would produce according to their abilitiesabilities

4. Goods and services would be distributed 4. Goods and services would be distributed according to people’s needsaccording to people’s needs