Economic Systems The benefits and downfalls of different economic systems. Mr. James Harold E. Winkler Middle School

Economic Systems A country’s economy is based on 3 questions: 1. What to produce? 2. How to produce it? 3. Who to produce for? Economic Systems – a system of production and the exchange of goods and services, for the benefit of the citizens of the nation.

Traditional Economy Traditional Economy – economic system in which decisions are based on tradition and customs. ◦Jobs are “handed down” ◦Little progress forward ◦Society is “primitive” and “undeveloped”, yet stable ◦Often rural and agricultural based Examples: 1. Tribal African villages 2. Inuit Native American tribes

Market Economy Market Economy Market Economy – (capitalism) economic system in which decisions are based on supply and demand. ◦Allows for maximum profit…and maximum loss. ◦People act in the best interest of themselves. ◦High individual freedom = no government involvement. Examples: 1. There is no true Market economy in the world. Why do you think that is? Turn & Talk: What could be some of the drawbacks to this economic system? What do we see in American economics?

Command Economy Command Economy Command Economy (communism) – economy controlled by the government, and decides what and at what price a good is produced. ◦Little individual economic freedom ◦Central government allocates goods to the people ◦Stricter governmental policy = less innovation Examples: 1. U.S.S.R – China 1949 – Present 3. North Korea 1949 – Present 4. Cuba 1955 – Present

Mixed Economy Mixed Economy - incorporates a mixture of privately and governmentally owned businesses and decision making. Examples: 1. The United States of America Privately Owned Business Governmentally Owned Business

Review Economic Systems A nation’s economic systems dictates how people work, live, and earn money. There are 4 major types of economic systems in the world today. 1.Traditional 2.Market 3.Command 4.Mixed

Crash Course – Capitalism v. Communism Answer the following questions: 1. What were/are some of the drawbacks to industrial capitalism in the 19 th century? 2. Why did Great Britain become the 1 st industrial capitalist country in the world? 3. What were Karl Marx’s beliefs on class struggle? Who was included? 4. Reflection: The United States government runs different businesses in the country, such as the U.S Postal Service, TSA (airport security), and this school building. Should government run other businesses, or should it be left to private individuals, such as Auto Bell, Harris Teeter, and General Motors (kind of)? Why?