U NIT 1, C HAPTER 1, S ECTION 4 Economic Theories Mr. Young American Government

E SSENTIAL Q UESTION How are the 3 types of Economic Theories (capitalism, socialism, and communism) different from one another?

I CAN: 1. List and describe the 3 major types of Economic Theories 2. Explain what type of economy the United States currently has 3. Analyze Karl Marx and his understanding of how communism works

P AGE 1: E CONOMICS Study of Human Efforts to satisfy seemingly unlimited wants through the use of limited resources 3 Major decisions: 1. What and how much should be produced 2. How goods and services should be produced 3. Who gets the goods and services that are produced

P AGE 2: C APITALISM An economic system providing free choice and individual incentives for workers, investors, consumers, and business enterprises Free market- buyers and sellers were free to make unlimited economic decisions Adam Smith- Wealth of Nations Laissez-Faire-government keeps its hands off economy Mixed-Market Economy- Free enterprise combined with and supported by government decisions (USA) 5 main characteristics: 1. Private ownership and control of property and economic resources 2. Free Enterprise 3. Competition 4. Freedom of Choice 5. Possibility of Profits

P AGE 3: S OCIALISM Government owns the basic means of production, determines the use of resources, distributes the products and wages, and provides social services Democratic Socalism where people have basic human rights but little control of production or ecomony 3 main goals: 1. Distribution of wealth and economic opportunity equally among people 2. Society’s control, through its government, of all major decisions about production 3. Public ownership of most land, of factories, and of other means of production

P AGE 4: C OMMUNISM Central government directs all major economic decisions; no class systems Karl Marx- Father of Communism; “Das Kapital” and “Communist Manifesto” Bourgeoisie- capitalists who owned the means of production Proletariat- workers who produce the goods Command Economy- decisions made at upper levels of government and handed down to managers

T HE C ULTIVATION OF C OTTON BY V OLKOV