1. Economic Systems

2. Capitalism Free Enterprise Market Economy Definition  An economic system based on private ownership of property and means of distribution  “Private “= people or individuals Goal  Maximum profit for owners

3. How is the goal of Capitalism achieved?  Private control of resources, production, distribution  Laissez Faire Theory  Government should play little to NO part in the economy

4. How is the goal of Capitalism achieved?  Law of Supply and Demand  High demand and low supply= high price  High supply and low demand = low price  Role of Consumer  Competition

6. Karl Marx’s ideas in response to the Industrial Revolution gave rise to 2 types of economies  Socialism  Communism

7. Socialism Definition  An economic system in which the major industries resources, and services are owned by the government Goal  To provide all citizens with basic economic needs

8. How is the goal of Socialism achieved?  Government owns main industries, resources, and distribution methods  Some private ownership (small business)  The creation of a welfare state

9. How is the goal of Socialism achieved? Creation of a welfare state  What you get  Housing, schooling, health care, retirement pension, unemployment insurance, guaranteed vacation time, maternity / paternity leave  What you give  Everyone pays really high taxes

10. Communism Definition  Government controls all parts of the economy Goal  To create a classless society replacing competition with cooperation to ultimately meet the needs of everyone.

11. How is the goal of Communism achieved? Government controls everything!!!!!!!!!!  Production  Distribution  Resources  Land  Consumption

12. Mixed Economy An economic system that is shaped by a variety of factors  private ownership  government involvement  culture/ tradition Most economies today are mixed!

13. Shanghai, China 1990

14. Shanghai, China 2010

15. In what ways is the US economy mixed? What is controlled by the government? What is privately controlled? What is influenced by culture and tradition?