1. Unit 5, Lesson 11 Economic Systems Today
AOF Business Economics
Unit 5, Lesson 11 Economic Systems Today
Copyright © 2008–2011 National Academy Foundation. All rights reserved.
Copyright © 2008–2011 National Academy Foundation. All rights reserved.

2. Economic reality varies widely between countries
The Economic Systems Spectrum is a tool for classifying different economic systems and showing ways in which they differ
Nearly all economic systems today fall between the two extremes
Why might a pure command or pure free-market system have problems?
Copyright © 2008–2011 National Academy Foundation. All rights reserved.

3. Pure free-market systems may neglect social and environmental issues, and are prone to instability
Command Economy
Mixed-Market Economy
Fewer worker protections
Environment often is not valued & protected properly
Instability (“boom and bust”) has high social costs
Free-Market Economy
Less economic security
Little or no regulation
Greater inequality
What are a clean environment and job security worth?
Copyright © 2008–2011 National Academy Foundation. All rights reserved.

4. Pure command systems neglect efficiency and innovation, and can be environmentally reckless too
Free-Market Economy
Mixed-Market Economy
Command Economy
Fewer incentives for innovation and performance
Less consumer choice
Inefficient allocation of scarce economic resources
Going for maximum production inefficiently can do environmental damage
Less economic innovation
Supply shortfalls
Too much regulation
Would working for the good of your country be incentive enough?
Copyright © 2008–2011 National Academy Foundation. All rights reserved.

5. Most of today’s economies are mixed
Command Economy
Mixed-Market Economy
Free-Market Economy
China
Mexico
USA
Economies differ from each other in that they tend either to one side (command) or the other (free market)
Where a country’s economy falls along the spectrum affects the way its businesses operate
Copyright © 2008–2011 National Academy Foundation. All rights reserved.