Who makes the decisions within each economic system? ECONOMIC SYSTEMS Who makes the decisions within each economic system?

Brainstorm activity On your notes page, list 2 things you already know or want to know about the four economic systems. Traditional Free Enterprise Communism Socialism

Economic questions Every society has limited resources. This means no society has enough goods and services to meet the needs of everyone. Because of this, each society must answer three economic questions.

Economic questions What should be produced? How should it be produced? Who should get it?

Economic systems The way in which society answers the economic questions is known as its “economic system.” Traditional Free Enterprise Communist Socialist

Economic systems traditional – main features Economic Decisions – custom and tradition determine what should be produced, how it should be produced and for whom. Production – based on custom and time- honored methods. New ideas are discouraged. Very little change or growth. Private Property – no private property. Things are owned by the family or village. Trade – goods and services are produced to meet the needs of the members of the family or tribe only. No trade with outsiders.

Economic systems traditional - examples Mostly found in rural, non-industrial areas Bushmen of the Kalahari Desert of South Africa Berber tribesmen of Algeria Villages in South Asia

Economic systems free enterprise– main features Private Property – people have a right to own private property and use this property as they see fit with limited interference from the government. Free Enterprise – people are free to take part in any business, buy any product or sell any legal product. Businesses can lower prices, provide better quality, advertise, etc. to attract customers. Profit Motive – the ability to make profits is what drives people to risk their money to start a new business. Supply & Demand – determines prices. When demand is high, the price goes up. If the supply is high but demand is low, the price goes down.

Economic systems free enterprise - examples Mostly found in countries with commercial agriculture and commercial industries. United States Great Britain Canada Japan Singapore Chile France Germany

Economic systems communism – main features Role of Government – all major decisions on production, distribution and use of resources are made by the government. Private Property – no private ownership. The nation or government owns all land, factories, farms and major resources. Cooperation – all workers labor together and share equally. Major Goal – to achieve a “classless” society – equality among all workers.

Economic systems communism - examples At one time there were MANY communist countries, but they were unable to keep up with the goods created by free enterprise systems. China – taking steps toward free enterprise. North Korea Vietnam Cuba

Economic systems socialism – main features Role of Government – government uses its power to bring an end to poverty by taking control of the major resources of the nation and providing public services. Economic Decisions – many decisions about production, distribution and the use of resources are made by the government. Other decisions are made privately. Private Property – major industries are owned by the government. Other property is owned privately. Major Goal – seeks a fairer distribution of income among society. People’s basic needs are met for free at a very low cost. (healthcare, transportation, housing, education)

Economic systems socialism - examples After World War II, most countries in Western Europe became Socialist, but many moved toward privatization in the 1980’s and 1990’s. Sweden Israel

Economic systems who makes the decisions? On your notes page, use what you’ve learned to fill in the “who makes the decisions” chart. You may work with a partner. Then draw a picture representation of each type of economic system.

Economic Systems - Review In which economic system does the consumer determine what should be produced, how it should be produced and who gets it? In which economic system does the government make all of those decisions? In which economic system does customs and traditions make those decisions? In which economic system does the government and sometimes the consumer make all of those decisions?

Economic systems - Review In which economic system does “supply and demand” determine prices of products and services? In which economic system is the goal to produce a “class-less” society? In which economic system is there very little change over time? In which economic system is the goal to make things “fairer” for all?

Economic systems mixed economies In the real world, no economy TOTALLY follows one economic system. Most countries have economies that blend features of each. Countries can be classified on a spectrum ranging from free enterprise to communist based on how much control the government has. Socialism Communism Free Enterprise

Economic Systems Case study You will be placed in groups of 4. Assign the following duties: Time Keeper – keeps time and keeps group on task Librarian – reads information Secretary – gather materials and keeps notes Illustrator – draws spectrum and records countries ALL GROUP MEMBERS – PARTICIPATE IN DISCUSSION

Economic systems case study Materials: Country packet 1 sheet of notebook paper Pen/pencil Butcher/construction paper 1 or 2 markers

Economic systems case study Instructions: Read each country’s economic information Determine what type of economic system each country has and take notes over characteristics of each country Draw an “Economic System Spectrum” on butcher/construction paper. (see example) Review notes from each country and decide where each country should be placed on the spectrum Be ready to support your group’s decisions

Classroom – “a” School supplies – students have the right to bring to class and use whatever school supplies they can afford including binders, paper, laptops and tablets. No school supplies such as paper or pencils will be provided by the teacher. Students are free to choose whether or not they complete assignments and tests. There is no late work accepted and there are no retests. Extra credit is offered and there is no limit to how high a student’s grade can be. Students making the highest grade will help teacher determine how difficult assignments and tests should be.

Classroom “b” Only teachers are allowed to use expensive laptops or tablets in the classroom. Students can choose their own binders and backpacks based on what they can afford. Teachers provide paper and pencils to all students. The teacher assigns some assignments that all students must complete and some assignments that are optional. Students who choose not to complete the optional assignments are not penalized. All students must complete tests. Students can not earn perfect scores of 100 on any assignment, test or final average. The lowest grade a student can make on any assignment, test or final average is a 70.

Classroom “c” Students may not bring any school supplies, binders or backpacks from home. Teachers will supply students with binders, paper and pencils that are all the same. There are no individual assignments or tests. Students will work together in groups which are assigned by the teacher and all students in a group will earn a 75-80 on all assignments or tests. No grades lower than a 75 or higher than an 80 will be assigned. The goal in this classroom is to be sure that all students are equal at all times academically and socially.