1. Economic Systems Review
Diploma Prep – Social 30
Economic Systems Review

2. Economic Systems
Two opposing values:
Collectivism and Individualism

3. Collectivism may be also referred to as: Command economy
Public enterprise
Centrally planned
Centralized
Nationalized
Government run
Government ownership
Regulation

4. No(or limited) gov’t ownership
Individualism
may also be referred to as:
Market economy
Price system
Private enterprise
Capitalism
Decentralized
Laissez faire
No(or limited) gov’t ownership
Deregulation

5. KEEP IN MIND THESE SYSTEMS ARE IN THEORY
LEFT RIGHT
Command Mixed Market
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USSR China Sweden Canada USA
Equality Elite
Karl Marx John Maynard Keynes Adam Smith
Das Kapital Wealth of Nations
Communist Manifesto
Keynesian Theory
good times  no gov’t
bad times  gov’t intervention
(ex. New Deal)
KEEP IN MIND THESE SYSTEMS ARE IN THEORY

6. Why do have economic systems?
need to solve the question of : SCARCITY
Unlimited wants vs Limited Resources
- durable natural
- non-durable human
- service capital(assets)

7. 3 questions all systems try to answer
What to produce?
How to produce it?
For whom is it produced?
Ownership of resources determines the type of economy

8. Market Economy interaction of consumer(buyer) and producer(seller
Demand Supply
price and quality

9. Business Cycles Inflation Growth(boom) Deflation(recession)
Depression(bust)

10. Deflation Inflation - shortage - too much supply
Lack of money lots of investing
- prices increase

11. Government has created policies to solve the problems of a business cycle.
Two main policies are:
Fiscal & Monetary
Two main problems:
Inflation & Unemployment

12. Gov’t tries to solve business cycle with two policies:
Fiscal
- spending and taxation
Ex. Social expenditures
progressive taxes
Monetary
$$ supply & circulation
Ex. Interest rates
bonds, stocks

13. Solution: Deflationary period  - increase money supply
- make it easier to borrow
ex. ?????
Inflationary period 
- decrease money supply
- make it difficult to borrow
ex. ??????

14. Examples of countries Command Mixed Market
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USSR Sweden USA
China Canada
Britain
Cuba Japan

15. Supply-Side Economics(capitalists)
this type of economics benefits the producers (businesses)
Aim to reduce fiscal policies
Ex. – Britain (Thatcherism)
USA (Reagonomics)
Canada (Mulroney)
Alberta (Klein)

16. Supply side cont’d - Decrease gov’t regulation
Decrease social expenditures
Decrease taxes
Believe in privatization – big business
TRICKLE DOWN THEORY

17. Demand-side Economics
- believe in the Keynesian Theory – increase gov’t involvement during bad times
Increase spending
Increase welfare
DEFICIT SPENDING