Chapter 2-1 Economic Systems

Crash Course Economics For Your Notes Please write down the questions and answer as the video plays The two major economic systems are: True communism means _____. An economy completely controlled by the gov’t is ____. The Invisible Hand Theory means ________. List 3 things gov’t must do: Most modern economies are called _______________. These economies are best at handling ______________.

--stems from ritual, habit or custom (elders make decisions) Three Economic Systems 1. Traditional --stems from ritual, habit or custom (elders make decisions) --found in tribes, Australian Aborigines and Inuits

--central authority answers the 3 questions (dictator) 2. Command --central authority answers the 3 questions (dictator) --individuals have little choice & are paid the same amount --found in North Korea

--people and firms answer the 3 questions 3. Market --people and firms answer the 3 questions --CONSUMERS play the biggest part in what is produced consumer sovereignty --most prosperous - US, Canada, Japan, S. Korea and western European countries

You will have 3 facts for each box Economic Systems Adv. & Disadv Traditional Command Market You will have 3 facts for each box + -