Ch. 2 Economics Systems work sheet 8/27 L.O. I will be able to list the characteristics of a free enterprise (MARKET) system. 1:3 Economic Questions 1. Economic question: What to produce? Summary of Economic question Because of scarcity, no country can produce every good or service. USA is a market economy and individuals decide what to produce. 2. Economic question: How to produce?

Summary of Economic question Will use machines or human physical labor? Will the govt. decide or will the individual? Economic question: For whom will the goods be produced? Will govt. decide who gets g/s, or will it be left to individuals who can pay? Comparing free enterprise (market economy) with socialism (command economy) What is free enterprise?

Individuals control all or most of the resources and control their use. What two terms are sometimes used to refer to free enterprise? Capitalism or market economy What is socialism? Govt. controls and owns most resources if not all. What two terms are sometimes used to refer to socialism? Command economy, or communist economy

Comparing information Area Free Enterprise Socialism Resources Controlled and by private individuals. Govt. controls and may own them. Govt.s role in the economy Govt. plays a smaller role in the 3 basic economic questions. Govt. sets production levels, in response to the 3 economic questions. Economic plans There no plans by the govt. individuals make the decisions Govt. sets plans for production of g/s Income distribution Less attention is paid to this. Govt. will redistribute from rich to poor. Controlling prices Price fluctuate (go up and down) do to market forces Govt. will control prices on all or at least certain goods. Private property Sacred – people take better care of stuff they own Govt. owns most property because they think they will be more fair.

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8/31 L.O. I will know the characteristics of a mixed economy. What is a mixed economy? There is no such thing as a pure free enterprise (market) economy. In the US, govt. controls a bunch of stuff. Why is a mixed economy not considered a major economic system along with free enterprise and socialism? There are varying degrees of free enterprise and socialism in individual countries, so you can’t just put mixed on them. What is a traditional economy? 3 economic questions are based on customs, skills, and culture.

Why is a traditional economy not considered a major economic system? There really isn’t any pure traditional economies out there today. Most economies are mixed. CHAPTER 2, SECTION 1 pg. 15 Skip # 1 Self-interest Self-interest cause people to work hard and take risks, which benefits society. Division of labor The division of labor creates greater productivity and wealth.

Competition Keeps price down and quality up. Government Should provide national defense, a system of justice, and public works. In questions 6-8, briefly describe the views of Karl Marx on the topics listed. Value of produced goods All value comes from labor Capitalism Exploits laborers

9-18 - YOU ARE ON YOUR OWN! - DUE TODAY! Development of nations Will develop through 6 stages from primitive to pure communism. 9-18 - YOU ARE ON YOUR OWN! - DUE TODAY!

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CHAPTER 2 SECTION 2 9/1 L.O. I will know what technological innovation made globalization a reality. Evidence of the Movement Toward Globalization Decline in U.S. tariff rates 1946 rate 40%. 2005 2.6% Increase in foreign exchange trading 1998 $820 million, 2004 $1.5 trillion Increase in foreign direct investment $23 billion in 1975, $644 in 1994 Increase in U.S. personal foreign investment 2% owner of foreign stock in 1980, 14% in 2005

Increase in membership in the World Trade Organization (WTO) 18 countries in 1948, 148 om 2005 Easier worldwide communication ****The internet has made communication way more efficient and faster Causes of the Movement Toward Globalization The end of the Cold War The barrier standing in the way of trade was gone Advanced technology Communication became much faster due to the internet

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9/3 L.O. I will be able to identify countries that have benefited from globalization. Policy Changes Countries have decided to open their door to increase trade Benefits of Globalization Benefit: Higher income Description: The living standard has dramatically increased for poor countries like India and China.

Benefit In the last 30 years hunger and child labor has been cut in half Description 200 million people in the world were raised up out of poverty in the last 20 years Cost Increased income inequality Today rich countries had 10 Xs the income as poor countries, now it is 75Xs

Response Critics of globalization says it causes income inequality, but supporters say it raises everyone’s income Costs Loss of American jobs Description Many American jobs are going to India and China as well other poor countries – pay is much cheaper. The US off—shores jobs to other countries, but

Other countries off-shore jobs to the US too. Costs More power to big Corporations. Description Many think that major corporations will control the world. They will be located in the US, Britain and France Response Supporters of corps. say that the top 100 major corps. only produce 4.3 % of all output of goods

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