1. Economic Systems Three Economic Questions (what, how, who)
The Free Market
Centrally Planned Economies
Mixed Economies

2. Main goal of any economic system
Welfare of people
Safety
Jobs
Healthcare
Sound Infrastructure

4. US Infrastructure Spending more than Europe Rank 14 in the world
Rank 2 behind Canada (large countries)

5. The Hyperloop

7. Chapter 2

8. Eventually

13. Three economic questions answered:
What (G&S) gets made (produced)?
How is it made?
Who gets it?
Scarcity
Who consumes which G & S?

14. Hyperloop interest
Gas prices
Affordability of cars
urbanization

16. Is is feasible?
We don’t know yet

17. http://www. detroitnews

18. Other ideas

19. Who is this guy I never heard of?
Elon Musk is a South African-born Canadian-American business magnate, investor and inventor. He is currently the CEO & CTO of SpaceX and CEO & Chief Product Architect of Tesla Motors. He founded SpaceX and PayPal.

20. 4. 5 basic economic goals Efficiency Freedom
Security and predictability
Equity
Growth and innovation

21. 5. 4 main kinds of economies
Traditional
Market
Centrally planned
mixed

22. Reviewing Key Terms Traditional economy Economic system Market economy
Factor payments
Centrally planned economy
Safety net

23. Chapter 2 Section 2

24. The Free Market Roles and Functions in a Free Market Economy
Who are the players
What do they do
What other factors affect the free market

25. The Free Market Economy
Individuals and businesses
own factors of production
make and buy what they want

26. Households (dual role)
own factors of production
consumers of G & S

27. Firms (businesses, companies)
make G & S
transform “inputs” into “outputs”

28. Self-interest
buyers and sellers consider only their self-interest > thus this becomes the MOTIVATING force in the market

29. Competition ( the great equalizer)
Because producers struggle for consumers’ dollars > competition is the regulating force in the market

30. Reviewing Key Terms C. Product market E. Incentive
I. Consumer sovereignty
H. Factor market
A. Profit
G. Specialization
D. Market

31. Chapter 2 Section 3
Centrally Planned Economies

32. Central Economic Planning in the Former Soviet Union

33. 1. Main Goal
Control economy > build national power and prestige

34. 2. Role of central government
A. Control land, labor and capital
B. Decide what, how much, and how to produce and distribute G & S

35. 3. Effects on agriculture:
a. Positive effect: Government provides equipment, seed, and fertilizer. Workers were guaranteed employment and income
b. Negative effect: little or NO incentive to produce

36. 4. Effects on industry Positive: jobs and wages were guaranteed
Negative: very little innovation, lack of worker incentive, lower quality resources for consumer goods

37. 5. Effects on consumers Positive: Luxuries were affordable
Negative: Few choices, shortages, and poor quality of goods and housing

38. Reviewing Key Terms
socialism…social and political philosophy based on the belief that democratic means should be used to evenly distribute wealth throughout a society
Communism…a political system that by characterized by a centrally planned economy. The central government has all the power

39. authoritarian…requiring strict obedience to an authority usually a dictator
Collective…large farm leased from the state to groups of peasant farmers
Heavy industry…industry that requires a large capital investment and that produces items used in other industries

40. Modern Economies National defense, roads and highway systems
Education, healthcare, employment, mass transit
Government owns all property and economic output
It is moving away from central planning

41. Hong Kong
Allowed to continue with free enterprise system
Free enterprise > limited role
Pure laissez faire > no role
8. Changing from centrally planned to market based

42. An industry is privatized when ownership is transferred from Government to Private Individuals > competition
No national economy today relies completely on either central planned or the free market