1. Economic Systems

2. Economic Systems
Countries must decide how to distribute its resources to meet the needs of its people. Countries do this through an economic system.

3. Economic Systems
An Economic System is the way a society organizes the production, distribution, and consumption of good and services.

4. Vocabulary Break
Number your paper 1-10 and label the pictures provided as examples of production, distribution, or consumption

5. Economic Systems
There are 3 basic types of economic systems that have to answer three basic questions:
What to produce?
How to produce?
For Whom to produce?

6. Economic Systems
WHAT TO PRODUCE? (What kinds of goods and services should be produced?)
HOW TO PRODUCE? (What productive resources are used to produce goods and services?)
FOR WHOM TO PRODUCE? (Who gets to have the goods and services?
The way a society answers these questions determines its economic system.

7. Types of Economic Systems:
1. Traditional Economy
2. Command Economy
3. Market Economy

8. Economics: Assigned Jobs

9. Traditional Economy
An economic system in which economic decisions are based on customs and beliefs
People will make what they always made & will do the same work their parents did
Exchange of goods is done through Bartering: trading without using money

10. Traditional Economy Who decides what to produce?
People follow their customs and make what their ancestors made
Who decides how to produce goods & services?
People grow and make things the same way that their ancestors did
For Whom are the goods & services produced for?
Self and trading purposes (people in the village who need them)

11. Traditional Economy Examples: Strengths: Predictable job and lifestyle
Villages in Africa and South America; the Inuit tribes in Canada; the caste system in parts of rural India
Strengths: Predictable job and lifestyle
Weaknesses: Lack resources and limited production

12. Command Economy
Government makes all economic decisions & owns most of the property
Sometimes called communism
Examples: Cuba, former Soviet Union, North Korea
This system has not been very successful & more and more countries are abandoning it

13. Command Economy Who decides what to produce?
Government makes all economic decisions
Who decides how to produce goods and services?
Government decides how to make goods/services
For Whom are the goods and services produced for?
Whoever the government decides to give them to

14. Command Economy
Strengths: people do not have to worry about employment, housing, education, and healthcare
Weaknesses: consumers own nothing, no choices/freedom, limited innovation by individuals

15. Market Economy
In a truly free market economy, the government would not be involved at all. Scary…
There would be no laws to make sure goods/services were safe. *Food! Medicine!
There would be no laws to protect workers from unfair bosses.
Because of this, there are no PURE market economies, but some countries are closer than others.
Some Examples: US, UK, Australia, etc.

16. Market Economy
Strengths: People can start their own businesses, more choice
Weaknesses: The desire for money may lead to poor quality of goods and services, business owners have to risk losing money

17. Market Economy Buyers and sellers answer the three economic questions
All resources are privately owned
Who decides what to produce?
Whatever the market demands that will produce a profit, businesses base decisions on supply and demand
Who decides how to produce goods and services?
Private producers (businesses)
For Whom are the goods and services produced for?
Consumers who demand the product and are willing to pay

18. Economics: What type of economy would you be in?

19. Distributed Summarizing:
Name that Economic System

20. Mixed Economy Market + Command = Mixed
There are no pure command or market economies. To some degree, all modern economies show characteristics of both systems and are often referred to as mixed economies.
Most economies are closer to one type of economic system than another
For example, businesses own resources and determine what and how to produce, but the Government regulates certain industries

21. Mixed Economy
Most democratic countries fall in this category (there are no truly pure Market or Command economies).
Examples: U.S., Brazil, Mexico, Canada, UK, etc.

22. Continuum of Economies
Mixed
Pure Command
Pure Market
Economics Continuum Video

23. The government makes ALL economic decisions.

24. Command

25. If your parents were peanut farmers, then you would be a peanut farmer also.

26. Traditional

27. Most democratic countries are this.

28. Mixed

29. Cuba is close to having this type of system.

30. Command

31. Business (ran by private citizens) determine what goods/services are produced and how they will be made.

32. Market

33. Bartering is used.

34. Traditional

35. Communist countries are closely related to this.

36. Command

37. Businesses make economic decisions, but the government regulates them to make sure they’re safe/fair.

38. Mixed

39. Australia is close to this.

40. Market

41. Economic Systems Continuum Activity

42. Continuum of Economies
Mixed
Pure Command
Pure Market

43. Bartering, traditional economy, customs/beliefs, ancestors, past
Role Play Terms
Bartering, traditional economy, customs/beliefs, ancestors, past
Market economy, free enterprise, businesses make what they want & how they want it
Command economy, strict government, no individual choice for what to make/buy
Mixed economy, democracy, private citizens have own business & government regulates them

44. Role Plays Look at your group’s vocabulary words.
Develop a skit that shows the term “in action”. This means, don’t just define the word—you have to act out how it works in a real world situation.
You will act out your role play in front of the class, so make sure that you really understand what the words mean!