1. Ch. 2 Economics Systems work sheet
8/27
L.O.
I will be able to list the characteristics of a free enterprise (MARKET) system.
1:3 Economic Questions
1. Economic question:
What to produce?
Summary of Economic question
Because of scarcity, no country can produce every good or service. USA is a market economy and individuals decide what to produce.
2. Economic question:
How to produce?

2. Summary of Economic question
Will use machines or human physical labor?
Will the govt. decide or will the individual?
Economic question:
For whom will the goods be produced?
Will govt. decide who gets g/s, or will it be left to individuals who can pay?
Comparing free enterprise (market economy) with socialism (command economy)
What is free enterprise?

3. Individuals control all or most of the resources and control their use.
What two terms are sometimes used to refer to free enterprise?
Capitalism or market economy
What is socialism?
Govt. controls and owns most resources if not all.
What two terms are sometimes used to refer to socialism?
Command economy, or communist economy

4. Comparing information
Area
Free Enterprise
Socialism
Resources
Controlled and by private individuals.
Govt. controls and may own them.
Govt.s role in the economy
Govt. plays a smaller role in the 3 basic economic questions.
Govt. sets production levels, in response to the 3 economic questions.
Economic plans
There no plans by the govt. individuals make the decisions
Govt. sets plans for production of g/s
Income distribution
Less attention is paid to this.
Govt. will redistribute from rich to poor.
Controlling prices
Price fluctuate (go up and down) do to market forces
Govt. will control prices on all or at least certain goods.
Private property
Sacred – people take better care of stuff they own
Govt. owns most property because they think they will be more fair.

5. Cheaters never prosper!

6. 8/31
L.O. I will know the characteristics of a mixed economy.
What is a mixed economy?
There is no such thing as a pure free enterprise (market) economy. In the US, govt. controls a bunch of stuff.
Why is a mixed economy not considered a major economic system along with free enterprise and socialism?
There are varying degrees of free enterprise and socialism in individual countries, so you can’t just put mixed on them.
What is a traditional economy?
3 economic questions are based on customs, skills, and culture.

7. Why is a traditional economy not considered a major economic system?
There really isn’t any pure traditional economies out there today. Most economies are mixed.
CHAPTER 2, SECTION 1 pg. 15
Skip # 1
Self-interest
Self-interest cause people to work hard and take risks, which benefits society.
Division of labor
The division of labor creates greater productivity and wealth.

8. Competition
Keeps price down and quality up.
Government
Should provide national defense, a system of justice, and public works.
In questions 6-8, briefly describe the views of Karl Marx on the topics listed.
Value of produced goods
All value comes from labor
Capitalism
Exploits laborers

9. 9-18 - YOU ARE ON YOUR OWN! - DUE TODAY!
Development of nations
Will develop through 6 stages from primitive to pure communism.
YOU ARE ON YOUR OWN! - DUE TODAY!

10. I feel sorry for reporters

11. CHAPTER 2 SECTION 2
9/1
L.O. I will know what technological innovation made globalization a reality.
Evidence of the Movement Toward Globalization
Decline in U.S. tariff rates
1946 rate 40% %
Increase in foreign exchange trading
1998 $820 million, 2004 $1.5 trillion
Increase in foreign direct investment
$23 billion in 1975, $644 in 1994
Increase in U.S. personal foreign investment
2% owner of foreign stock in 1980, 14% in 2005

12. Increase in membership in the World Trade Organization (WTO)
18 countries in 1948, 148 om 2005
Easier worldwide communication
****The internet has made communication way more efficient and faster
Causes of the Movement Toward Globalization
The end of the Cold War
The barrier standing in the way of trade was gone
Advanced technology
Communication became much faster due to the internet

13. COLD WAR IS OVER!

14. 9/3
L.O. I will be able to identify countries that have benefited from globalization.
Policy Changes
Countries have decided to open their door to increase trade
Benefits of Globalization
Benefit:
Higher income
Description:
The living standard has dramatically increased for poor countries like India and China.

15. Benefit
In the last 30 years hunger and child labor has been cut in half
Description
200 million people in the world were raised up out of poverty in the last 20 years
Cost
Increased income inequality
Today rich countries had 10 Xs the income as poor countries, now it is 75Xs

16. Response
Critics of globalization says it causes income inequality, but supporters say it raises everyone’s income
Costs
Loss of American jobs
Description
Many American jobs are going to India and China as well other poor countries – pay is much cheaper.
The US off—shores jobs to other countries, but

17. Other countries off-shore jobs to the US too.
Costs
More power to big Corporations.
Description
Many think that major corporations will control the world. They will be located in the US, Britain and France
Response
Supporters of corps. say that the top 100 major corps. only produce 4.3 % of all output of goods

18. Older Brothers Are Jerks!