Download presentation
Presentation is loading. Please wait.
1
Economic Systems Chapter 2
2
Terms to know Economic system Factor payment Profit Safety net
Standard of living Innovation
3
What if? The government limited your choices of cereal and soap you had available? What if you only had access to goods that you and your neighbors were able to grow or make yourselves? These are examples of different economic systems
4
Three key economic questions
What goods and services should be produced? How should the goods and services be produced? Who consumes the goods and services?
5
The way society answers the three economic questions defines its economic system
Economic system is the structure of methods and principles a society uses to produce an distribute goods and services
6
What goods and services should be produced?
Which consumer goods should we produce? How much of our resources should we devote to national defense, education, consumer goods? Because resources are limited, each decision that a society makes about what to produce comes at an opportunity cost
7
How should goods and services be produced?
Although there are many ways to produced goods and services, all require land, labor, and capital These factors of production can be combined in different ways
8
Who consumes goods and services?
Societies must decide how goods and services are consumed Determined by how societies distribute income
9
Economic goals and societal values
Different societies answer the three different economic questions based on importance they attach to various economic goals These goals include: efficiency, freedom, security, equity, and growth
10
Economic Efficiency If a society can accurately assess what its people need an want, it increases its economic efficiency The goal of reducing waste also involves the second and third economic questions An economy that can deliver the right goods in the right quantity to the right people at the right price is not efficient
11
Economic freedom Most people value the opportunity to make their own choices People face limitations on their economic freedoms Economic freedoms include we buy what we can pay for, to seek work where we want, to own property, to become entrepreneurs
12
Economic security Economic systems seek to reassure people that goods and services will be available when needed and that they can count on receiving expected payments on time Security of knowing that help is available if we need it Layoffs Injuries Natural disasters
13
Economic equity Fairness is an economic goal that is defined differently in different societies Should one’s consumption depend on how much one produces? Should everyone get the same share of goods and services nation produces? How much should society provide for those who are unable or unwilling to produce?
14
Economic growth A nation’s economy must grow with its population so it can provide jobs for the new people joining the workforce A nation’s economy must grow if people are going to have more income Improve standard of living Innovation plays a huge role in economic growth
15
Goals in conflict Society may value other goals
Environmental protection Full employment Protecting national industries To protect the environment, a government may impose regulations on manufacturers which curb economic freedom All nations must prioritize their economic goals, each comes with some kind of trade-off
16
Types of economies Traditional economy Command Economy Market Economy
Mixed economy
Similar presentations
© 2025 SlidePlayer.com. Inc.
All rights reserved.