1. Basic Economic Concepts
Economic Systems

2. Goals Apply the three key economic questions to each economic system.
Determine which of the 7 Broad Economic Goals are most important to each of the three primary economic systems.

3. I. 7 Broad Economic Goals Economic Growth Full Employment
Steady growth in GDP
Economic Growth
Everyone who wants to work, is working
Full Employment
Prices stay relatively stable or no hyperinflation
Price Stability
Assurance of availability of goods
Economic Security
Businesses and individuals make all decisions
Economic Freedom
Making the most of resources
Economic Efficiency
Wealth is evenly distributed
Economic Equity
Have them get into pairs and rate the values in order from least important to most important

4. II. Key Economic Questions

5. III. Traditional Economies
What to produce?
What is needed for survival
Ex. Food and shelter
How to produce?
Based on culture and practices that are passed on
Ex. Fishing for food
Who to produce for?
Based on customs or traditions
Ex. The community or deities

6. IV. Market Economy Based on supply and demand
What to produce?
Based on supply and demand
Ex. Pokémon is popular, so you will see more merchandise
How to produce?
Business decisions
Ex. Manual labor vs. Machinery
Who to produce for?
Whomever will purchase the good or service
Ex. Customers who are willing and able to pay

7. V. Command Economies The government Ex. China’s steel production
What to produce?
The government
Ex. China’s steel production
How to produce?
Ex. Russia’s production of glass
Who to produce for?
Ex. The government decides on the allocation of goods to the people

8. VI. Mixed Economy Depends. Ex. Business owners decide their product.
Economic Systems tend to be on a scale from command to market.
VI. Mixed Economy
What to produce?
Depends.
Ex. Business owners decide their product.
Ex. Some products are outlawed.
How to produce?
Ex. Business owners are allowed to innovate production means.
Ex. FDA and other organizations set parameters.
Who to produce for?
Ex. Business owners can sell most products to anyone.
Ex. Laws prohibiting use of inappropriate products by minors.

9. 1.
In a command economy
The market dictates the answers to the fundamental economic questions.
Competition helps answer the fundamental economic questions.
State and local governments respond to the fundamental economic questions.
The central government dictates the answers to the fundamental economic questions.
Laws are set up to answer the fundamental economic questions. D

10. 2. Market economies Rely on markets to coordinate economic activity.
Rely on the government to address the fundamental economic questions.
Rely on elected officials to make the most important economic decisions.
Rely on courts to ensure people and firms to get what they deserve.
Are more equitable than command economies. A

11. 3. Compared to a command economy, a capitalist economy emphasizes
Equity.
Planning.
Efficiency.
Centralization.
Human rights. C

12. 4. Prices in capitalist economies are Unfair.
Determined in competitive markets.
Determined, in most cases, by the federal government.
A reflection of our basic values.
A means to achieve equality. B