Economic Systems and Growth Macroeconomics Economic Systems and Growth Purpose: Identify how nations use their goals to answer the key economic questions.

I. Goals Understand the theme of each system and the strengths and weaknesses of each Relate the 7 Broad Economic Goals from yesterday to the three primary economic systems

II. Key Economic Questions

III. Traditional Economies What to produce? What is needed for survival Ex. Food and shelter How to produce? Based on culture and practices that are passed on Ex. Fishing for food Who to produce for? Based on customs or traditions Ex. The community or deities

III. Traditional Economies Strengths Clear work roles Little to no waste Little disagreements Weaknesses Slow to innovation Less productive Lower standard of living South American Tribe: https://www.youtube.com/watch?v=WEsDZx1U0Fc

IV. Market Economy Based on supply and demand What to produce? Based on supply and demand Ex. Pokémon is popular, so you will see more merchandise How to produce? Business decisions Ex. Manual labor vs. Machinery Who to produce for? Whomever will purchase the good or service Ex. Customers who are willing and able to pay

IV. Market Economies Strengths Weaknesses Innovation Individual freedom Private ownership Consumer sovereignty Weaknesses Equity is challenging Not much job security Effective legal system that is nondiscriminatory Seinfeld: http://yadayadayadaecon.com/clip/37/

V. Command Economies The government Ex. China’s steel production What to produce? The government Ex. China’s steel production How to produce? Ex. Russia’s production of glass Who to produce for? Ex. The government decides on the allocation of goods to the people

V. Command Economies Strengths Weaknesses Jobs and income for all Nationalist propaganda Government has a more direct role Weaknesses Needs are not met Little incentive to create Freedoms are sacrificed The Office: http://economicsoftheoffice.com/all/?cha=Jim