ECONOMIC SYSTEMS WHAT ARE THEY? WHAT PURPOSE DO THEY SERVE?

A. Economic Systems 1. Traditional = past ways and beliefs determine what goods and service should be produced 2. Market = the government has little or no say in what can be produced 3.Command = the government controls the economy and decides what goods and services should be produced 4.Mixed = the government has some control in order to keep the economy healthy

A. Continued……. 5. All must answer 3 basic questions:  What goods and services should be produced?  How should they be produced?  Who should get the goods and services?

B. Traditional 1. People willingly share and trade basic goods and services 2. Tradition sets the way for what and how goods and services are produced

C. Market 1. Also known as Capitalism 2. Producers are free to produce and sell however they wish 3. Buyers have the freedom to buy or not to buy goods or services 4. Buyers help answer these 3 questions: what, how and for whom? 5. The goods and services are based on consumer buying decisions

C. Continued…… 6. The government has little say in what is produced 7. People can own property and businesses 8. People can run any business within the law and are free to compete with all 9.People are free to make economic choices 10.Businesses are allowed to succeed (make a profit!)

TRUE MARKET SYSTEM….

D. Command 1. The government controls what is produced and how things are distributed 2.The government sets prices on most goods and services 3. Socialism and Communism

E. Mixed 1. Most countries have mixed economies (even the US to a degree) 2. The government has some say in what is produced!

F. Goals of Economic Systems 1. Economies should be free, growing and secure 2. New and better goods are constantly being produced 3. Jobs give people the ability to buy goods and services and pay taxes 4. Standard of living will be high for citizens (Standard of living = the availability and quality of goods produced)

THE LIGHTER SIDE …….

G. Karl Marx 1. Believed capitalism would collapse as poor workers would rise up and overthrow the wealthy 2. Communism – the factors of production would be owned by everyone 3. People would produce according to their abilities 4. Goods and services would be distributed according to people’s needs