1. LOST You and 4 people are shipwrecked on a deserted island. You have enough plant materials to make 1 small shelter OR 1 large rescue fire, and enough food and water for 3 people to last 10 days. What survival decisions will you make?

2. What did you do?How did you do it?Who benefits?

3. Economic Systems

4. How Does An Economy Work? 3 Basic Economic question: What goods and services should be produced? How should the goods and services be produced? For who should the goods and services be produced? The way a nation answers these questions defines their economy.

5. Types of Economic Systems Two broad categories: Market (or Capitalist) System Command (or Planned) System

6. A Pure Market Economy No government involvement in economic decisions The government lets the people answer the three basic economic questions What? Consumers decide through purchases How? By individual business Who? Money has buying power – encourages hard work and investments

7. A Pure Command Economy The Government controls the factors of production and makes all the decisions What? By one person (dictator) or gov’t group How? Gov’t owns all businesses and decides Who? Gov’t decides who will get what

8. Mixed Economies Some government involvement through mandatory laws and regulations that businesses follow Labor Laws, Minimum Wage The government provides social programs for those who need help Medicare, welfare Classification of economy based on how much the government is involved in the process

9. Continuum of Economic Systems Command Economy Communism On the far left Market Economy Capitalism On the far right Socialism Left of center but right of communism

10. Capitalism An economic system characterized by private ownership of businesses and marketplace competition The political system: democracy with leaders elected by the people Government’s concern: people who cannot care for themselves. The United States and Japan

11. Socialism Increased government involvement The main goal is to keep prices low for all people and to provide employment The government runs key industries and makes economic decisions More social services for all and free or low cost medical care Canada, Germany, Sweden, Australia and Great Britain

12. Communism The government runs everything (Totalitarian government) One political party: the Communist party Government assigns jobs –virtually no unemployment The government assigns housing, schools, and occupations There is little to no economic freedom Cuba, North Korea, and China are examples

13. Economies In Transition The breakup of the Soviet Union Privatization: government owned businesses are sold to private citizens or businesses Central and Eastern Europe, such as Russia, Poland, the Czech Republic, and Slovakia