1. Understanding Economics
ECONOMIC SYSTEMS

2. What is ECONOMICS?
The study of how people use their limited resources in an attempt to satisfy unlimited wants.

3. What are ECONOMIC SYSTEMS?
The means by which governments answer the following questions:
What to produce?
How to produce?
For whom to produce?

4. 4 Economic Systems TRADITIONAL
An economic system usually found in agricultural societies where people make what they need to survive.

5. 4 Economic Systems COMMAND
An economic system in which the government controls all production and distribution.
E.g. Cuba

6. 4 Economic Systems MARKET
An economic system wherein supply and demand determine what is produced and sold.
E.g. USA

7. 4 Economic Systems MIXED-MARKET An economic system which
blends command and
market principles.
E.g. UK

8. European Economies UNITED KINGDOM Mixed-market Economy
Second largest economy in the EU
Service industries like banking, insurance, and business services account for most of the UK’s GDP.
Since 1979 the British government has turned many state-owned companies over to private ownership, setting up free market competition instead of government control.
E.g. British Steel; British Coal; British Airways

9. European Economies GERMANY Social Market Economy
Strongest economy in Europe
3 Parts of the German economy:
Market system (i.e. free enterprise & competition)
Some state control
Social welfare (i.e. help for the poor)
In 1990, when West Germany and East Germany were united, West Germany absorbed huge costs bringing East Germany’s command economy into its market system.
E.g. British Steel; British Coal; British Airways

10. European Economies RUSSIA Mixed-market Economy
The Russian economy has struggled as it transitions from a command economy under the Soviet Union to a market economy under the Russian Federation.
Many government-owned companies are being sold to the private sector.
Russia still faces financial problems and huge costs to upgrade its old manufacturing plants and industries to modern, more efficient standards.
E.g. British Steel; British Coal; British Airways