Economics

Economic Systems 5 Types of Economic Systems - 2 are Free-Market Economies - 3 are Centrally Planned Economies €£¥$€£¥$

Keys to a good economy Low unemployment Low and stable inflation Thriving stock market Income equality Good education

macroeconomic aims... 1) low and stable inflation 2) high and sustained economic growth 3) balance of payments not in deficit 4) low unemployment microeconomic aims 1) efficient resource allocation - ensure that there is no missing markets 2) income equality

Free Market Traditional Capitalism Centrally Planned Socialism Fascism Communism

Free Market Economies Individuals make their own choices, not government There is the possibility of making a bad choice or being swindled or cheated It requires each individual to know how to make good economic choices

1. Traditional Economy Also called “the barter system” People trade goods and services for other goods and services directly No currency is involved

2. Capitalism -Emphasizes ______ of _____ and individual ________ for workers, investors, consumers, and business enterprises -Free Enterprise System - _______ and ______ free to make their own economic decisions -Laissez-Faire – Leave the economy alone, “let it be” with little gov’t regulation -List of capitalist countriesList of capitalist countries freedomchoice incentive buyers sellers

Capitalism - free enterprise - private ownership and control of property and economic resources - competition among businesses

3. Socialism -Government attempts to distribute wealth _______ -Government controls _______ and _______, and decides what is _______ -Government owns the means of __________ -List of socialist countriesList of socialist countries equally wagesprices produced production

Socialism - distribution of wealth equally - public ownership of most land, factories, and other means of production - government provides public services

4. Fascism Also called National Socialism Government _________, but does not own businesses ___________ sets wages and prices Purpose of Fascism is centralization of economic power to the government, and away from ____________ List of Fascist countries controls Government individuals

5. Communism - Government has total control of all ______ of _________, and owns __________ - Karl Marx – wrote The Communist Manifesto To Marx, all of history was a struggle between social classes competing for control of productive property. The value of a commodity was set by the amount of labor put into it. Marx saw the state and its government as tools by which the capitalists maintained their order and privileges. meansproduction everything Karl Marx

Communism - state owned land, natural resources, industry, banks, and transportation facilities; state controlled mass media

Tax Structures Flat Tax –All persons pay the same percentage of tax –Finland, Estonia, Switzerland pay a Flat Tax Progressive Tax (Suggested by Karl Marx) –Pay an increasing percentage of tax based on income –Most common tax in the world today –United States has a progressive tax – the_United_Stateshttp://en.wikipedia.org/wiki/Income_inequality_in_ the_United_States

Levels of Industrialization Three Levels of Industrialization - Underdeveloped Countries - Developing Countries - Developed Countries

Underdeveloped Countries High Birth Rates + High Infant and Child Mortality Rates = _____ Population Growth No Infrastructure, Low Technology High Poverty, No Medical Care Examples: Afghanistan, Niger, Somalia, Ethiopia slow

Developing Countries High Birth Rates + Low Infant and Child Mortality Rates = _____ Population Growth Some Infrastructure, Scattered Access to Technology Extremes between Rich and Poor, Some Medical Care Examples: Most of Central and South America, Middle East rapid

Developed Countries Low Birth Rates + Low Infant and Child Mortality Rates = _____ Population Growth Lots of Infrastructure, Plentiful Technology Low Poverty, Good Medical Care Examples: United States, Europe no