Economic Systems

Combines elements of both free market enterprise & government intervention Planned economy Government determines price of goods & services, and supply Price of goods & services dictated by the market

many countries operate under a mixed economy In Canada, certain elements are overseen by the government such as the military or postal service, while allowing other elements to be controlled by a free market such as the fluctuating cost of gas How big of a role should the government have in mixed economies? Economic Liberalism Adam Smith No government interference or intervention

a.k.a “Progressive Thought” John Maynard Keynes proposed that the government has a role to play during difficult economic times i.e. The Great Depression can stimulate the economy by increasing spending during periods of high unemployment, which would provide jobs for people; consequently, with higher employment, the economy would improve as people would have income to spend on goods and services popular in the developed world till the 1980s, “replaced” by Neo-liberalism – a return to freer market economy and reduced role for the government Keynesian Economics

Economic globalization: the easy movement of goods, productions, capital and resources among countries Elimination of barriers to trade i.e. European Union, North American Free Trade Agreement Pros & Cons elimination of trade barriers = economic development for periphery no barriers = market for products, cheap labour, profit for transnational corporations (sweatshops) less gov’t intervention = no social support i.e. Homelessness Impacts of Neo-Liberal Policies Balance? Government subsidies to farmers = protection from free market