2. Economic Systems

3. What is an economic system? (1) An economic system is the way a nation uses its resources to meet the needs of the people. Huh!? Each country uses an economic system to manage the financial welfare of their people. Think of an economic system as the way a country does business

4. There are Four Basic Economic Systems: TraditionalCommandMarketMixed Can you guess which one the U.S. has? I’m not telling! You’ll just have to wait & see!

5. All Economic Systems must deal with three questions... WARNING! WARNING! WARNING! THESE THREE QUESTIONS WILL BE ON THE CRCT!

6. 1. WHAT goods will be produced? (2)

7. 2. HOW will goods be produced? (2) Fishing ManufacturingMiningFarming

8. 3. FOR whom shall goods be produced? (2)

9. Economic Systems are named for how they deal with those three questions. Traditional Traditional Command Command Market Market Mixed Mixed A. The government makes all decisions about what to produce and takes command of the businesses. B. Producers look at the market and make decisions about what to produce based on what people want to buy. C. Customs and traditions make decisions about what will be produced. D. A combination or mix of command and market systems. C.C. A. B. D.

10. I. Traditional Economies... Are based on traditions and customs Members usually share everything Rely on themselves for their needs Generally depend on hunting & gathering Seldom seen in modern society Examples...

11. II. Command Economy The government decides what goods are made The government decides how they will be made The government decides how they will be sold The government decides the price for the goods There are no pure command economies today, but a few come close... China North Korea

12. III. Market Economy Sometimes known as free market or free enterprise The government plays little or no role in a market economy People are free to exchange goods and services without government interference or regulations Individuals set prices without any government planning Any person may start a business making or selling whatever they want No one is guaranteed success in a market economy, but anyone is free to try There are no countries with PURE market economies, but a few that come close are... Canada Mexico

13. IV. Mixed Economy Has elements of all the other three economies Individual ownership is encouraged The government does set some regulations Sometimes referred to as a capitalist system Countries with mixed economies include... The United StatesThe U.K.

14. Pop Quiz!! ___ 1. traditionalA. has a market economy ___ 2. commandB. based on customs ___ 3. marketC. has a command economy ___ 4. mixedD. it’s all about the government ___ 5. CanadaE. no government interference ___ 6. UKF. has a mixed market economy ___ 7. North KoreaG. has elements of all four 8. Which system relies on itself for all its needs? 9. In which system does the government play no part? 10. What are the three questions all economic systems must answer? Yeah, baby!

15. Answers! Answers! 1. traditionalA. has a market economy 1. traditionalA. has a market economy 2. commandB. based on customs 2. commandB. based on customs 3. market C. has a command economy 3. market C. has a command economy 4. mixed D. it’s all about the government 4. mixed D. it’s all about the government 5. CanadaE. no government interference 5. CanadaE. no government interference 6. UKF. has a mixed market economy 6. UKF. has a mixed market economy 7. North KoreaG. has elements of all three 7. North KoreaG. has elements of all three B D E G A F C

16. More Answers 8.Which system relies on itself for all its needs? Traditional. (Native Americans did not shop at Wal-mart!) Traditional. (Native Americans did not shop at Wal-mart!) 9. In which system does the government play no part? Market (Sometimes known as Free Enterprise) Market (Sometimes known as Free Enterprise) 10. What are the 3 questions all economic systems must answer? What goods will be produced? What goods will be produced? How will they be produced? How will they be produced? For whom shall they be produced? For whom shall they be produced?

17. The End!