OTHER ECONOMIC SYSTEMS

THE THREE ECONOMIC QUESTIONS. Question #1.  Which goods and services should be produced? All countries have their own economic system. They place a priority or value on which goods and services that they need or want to be produced. What goods and services will be produced is decided by the economic system.

THE THREE ECONOMIC QUESTIONS. Question #2.  How will these goods and services be produced?  Countries have different economic resources.  Some countries have a lot on natural resources  Some people have a lot of human resources (people). China- India  Some countries have technological or capital resources.

THE THREE ECONOMIC QUESTIONS. Question #3.  How will these goods and services be distributed?  Some people in society receive very few resources while others receive many. ***Why?*** An economic system must have guide lines to determine how income will be distributed. History, Culture, Geography, and Political system may decide who, and how goods and services are distributed.

Traditional Economy

 The families or community share the resources.  How are the three economic questions answered? By tradition, customs, and religion.  What was done in the past is done today.  What is the role of government in the economy? tradition, customs, and religion  ( Elders, Chiefs ).

Traditional Economy  Where are there traditional economies?  Africa, South America, Asia Alaska, Northern Canada, Northern Europe, South Eastern Russia.

Traditional Economy  Advantages:  Everyone has a role in the economy, so the community is stable. Usually everyone is taken care, elders are well respected.  Disadvantage:  A traditional economy discourages change.  New products and methods are never accepted. This type of economy will fall behind.

1. How are the three economic questions answered in a Strong Command Economy? 2.What is the name of the political system that is associated with a strong command economy? ___________________ 3.Name two countries that have a strong command economy. 1. ____________ 2. ______________

 The government in a strong economy is controlled by one person, or a small group of people. The one person that controls the country of Cuba is Fidel Castro. He is a military dictator. China, North Korea and the former Iraqi government are examples of strong command economies, and dictatorships.

 What is the Political system called that supports a Command Economy?  COMMUNISM

 Advantages  The economy can change production of goods and services in a short period of time.  Example: Instead of producing tractors they will produce trucks.  Disadvantages  Consumer Goods and services rank low on list of priorities list.  Lack of work incentives.  Everyone receives the same wage.  There is no competition.  No Private Property.  Individual Freedoms are few. NO Real FREEDOM of Choice. What is at the store is what you buy, or not.

 Major industries are owned by the government. Others are owned by private individuals.

 In a moderate economy the government controls such industries as transportation, Steel Mills, and Mines (Oil, Coal).

1.Who answers the three economic questions?  A. The GovernmentB. The Citizens C. Private BusinessD. All of the above  2. What is the political system called that supports a Moderate Command Economy?  3. What are some countries that have a Moderate Command Economy system?

 The Answer is:  D. The Gov. and Business and the consumers create the market place.  The primary players in the economy are the government and Big Business. France, Great Britain, Canada, Most or all of Europe. Socialism

 Advantages  Individuals are given many governmental services. Health Care. Social Security. Welfare. Retirement. Child Care.  Disadvantages  Workers are taxed extremely High. 50%.  Discourages private Businesses from starting. Big business is the most popular.  Less spendable income.

. How are the three economic questions answered in a Market Economy?

 The Market :  The actions of the individual people and business firms participating in many different Markets. (areas).  Market = Individuals + Businesses. (Government)  The three economics questions are answered (formulated) by the motivation of the businesses and the self interests behavior of the consumers.

I. The goal of businesses are to: A: Find out what the consumer needs or wants? B: At what price will the consumers pay for a product? How much will they buy at a certain price? II.Who receives the finished goods and services can depend on the market. II.A. A person who receives more income and has the ability to secure more resources; this person can do this because they have a job or career that is highly valued and in turn receives a lot more income.

III.A business needs to charge enough money to earn a profit on a product. IV. A Market Economy should operate with limited government intervention.

 The Consumer and Producer of a market economy play the most important role in a Market Economy.  If a consumer wants a product then the producers will produce it.

 Advantages  A market can adjust to change as consumer needs and wants change.  A market economy offers freedom for everyone involved. Producers can produce what they want and consumers can buy what they want.  Disadvantages  It only rewards citizens who are productive in the economy.  The wealth of the economy is not evenly distributed through society.  The welfare of some citizens will not be provided for.

 Name a country that has a market economy?  _______________ What is the political system called that supports a Market Economy? _______________

 CAPITALISM. IN True Capitalism there is no government involvement. The Government should be hands off– Or Laissez-Faire. The consumers and producers in the market place will take care of the needs and wants of society.

 All Economies. Are not pure Traditional, Strong Command, Moderate Command or Market Economies. They all have principles that they share. They have some consumer involvement, Business involvement and Government Involvement. WHY?

Producers Government Consumers

All Economies have Government intervention. Even Market Capitalistic Societies. The state of the economy and the needs of the people will dictate how government intervention is needed in the market place.