1. Economic Systems CHAPTER 2 SECTION 1: Types of Economic Systems
Holt Economics
4/16/2017
CHAPTER 2
Economic Systems
SECTION 1: Types of Economic Systems
SECTION 2: Features of the U.S. Economy
SECTION 3: The U.S. Economy at Work
Chapter 2

2. Objectives: Types of Economic Systems SECTION 1
How are the three basic economic questions answered in traditional, command, and market economies?
What are the roles of self-interest and incentives in a market economy?
What types of mixed economies exist today?

3. Types of Economic Systems
SECTION 1
Types of Economic Systems
How the three basic economic questions are answered in various economies:
Traditional economy
what to produce determined by tradition
how to produce determined by custom
for whom to produce determined by the number of members in the society
Command economy—answers to all questions determined by government officials
Market economy—answers to all questions determined by individuals

4. Roles of self-interest and incentives in a market economy:
SECTION 1
Types of Economic Systems
Roles of self-interest and incentives in a market economy:
Self-interest drives people to fulfill their needs and wants and helps the market grow.
Incentives help people decide which economic choices are in their self-interest.

5. Types of mixed economies currently in existence:
SECTION 1
Types of Economic Systems
Types of mixed economies currently in existence:
authoritarian socialism
capitalism
democratic socialism

6. Objectives: SECTION 2 Features of the U.S. Economy
What are the basic principles of free enterprise in the United States?
What are the two markets of the circular-flow model?
How does the circular-flow model reflect exchange?

7. Basic principles of free enterprise in the United States:
SECTION 2
Features of the U.S. Economy
Basic principles of free enterprise in the United States:
freedom to own private property and enter into contracts
freedom to make choices
freedom to engage in economic competition
freedom to make decisions based on self-interest
freedom to participate in the economy with limited government involvement and regulation

8. Two markets of the circular-flow model:
SECTION 2
Features of the U.S. Economy
Two markets of the circular-flow model:
product market
resource market

9. Circular Flow Model

10. How the circular-flow model reflects exchange:
SECTION 2
Features of the U.S. Economy
How the circular-flow model reflects exchange:
shows the flow of resources and products to businesses and the government
displays the flow of payments to individuals

11. Objectives: The U.S. Economy at Work SECTION 3
How do nations decide how to use scarce resources?
What are the major goals of U.S. economic policy?
Why do economic goals sometimes conflict?

12. How nations decide how to use scarce resources:
SECTION 3
The U.S. Economy at Work
How nations decide how to use scarce resources:
Households, businesses, and the government work together to set goals.

13. Major goals of U.S. economic policy:
SECTION 3
The U.S. Economy at Work
Major goals of U.S. economic policy:
freedom
efficiency
equity
security
stability
growth

14. Why economic goals sometimes conflict:
SECTION 3
The U.S. Economy at Work
Why economic goals sometimes conflict:
differences in the goals of various socioeconomic groups
differences in how to achieve goals

15. CHAPTER 2
Wrap-Up
1. How does the U.S. economic system compare to traditional and command economic systems?
2. In which category of mixed economic systems does the U.S. fit? Explain your answer.
3. Give an example of a traditional economic system. What are the consequences to an individual consumer who enters into a contract?
4. What are the economic principles of private property and voluntary exchange?

16. Wrap-Up CHAPTER 2 5. What are the goals of U.S. economic policy?
6. Why are scarcity and choice basic economic problems?