1. Economic Systems of the World. What are the major types of Economic systems ? How does each answer the 3 Basic Economic Questions? Traditional Market Command

2. Three Economic Questions  What goods and services will be produced?  What do we have?  How will they be produced?  Hand > machine > elsewhere  Who gets the stuff?

3. 3 Economic Systems  Economic system (economy) – an organized way of providing for the wants and needs of people. 1). Command 2). Market 3). Traditional

4. Traditional Economic Systems

5. Tradition, Tradition, Tradition  What, how and for whom to produce are answered by ritual, habits, customs  Tribal Societies Across the world  Communal living, little private property  Advantages Disadvantages  Methods Work Subsistence living  Everyone knows Role Low standard of living  Life is predictable and Discourages new ideas stable Never changes

6. Time to Get Creative!!!!!  Describe what each of the following would look like in a traditional economy  Waking up in the morning  You and your friends hangout in the afternoon  Going to get food for dinner

7. Communism : Command  Gov’t answers 3 Basic Economic Questions  No Private Property Rights  Total Government Control o Government owns all resources!!!!!

8. Command Economies - Pros  Allows an economy to change direction very quickly.  After Stalin’s first two Five Year Plans, Russia moved from a rural agricultural economy to an industrial economy.

9. Command Economies - Pros  Little uncertainty as to who will do what.  No unemployment because the government gives everyone a job (whether it is needed or not).  Ayn Rand - Anthem

10. Command Economies - Cons  Not designed to meet the wants of consumers.  Stalin’s Five Year Plan directed resources away from both agriculture and consumer goods.  Provides strange incentives  Do just enough to meet quotas.

11. Command Economies – More Cons  No rewards for individual performance.  No flexibility to handle problems.  Requires a large decision making agency.

12. Circle the words that fit with Command Economies Lots of Choices Government housing Economic freedom Central planning Merit Pay Cuba Incentives to work Basic needs met Get what you need Slow to change No Technology Equal distribution of wealth Happy Consumers Government control Private Property Fast to change Day to day flexibility Tribes North Korea

13. Expansion of Communism 

14. Stop, Collaborate and Listen  What are the similarities and differences of Traditional and Command Economies? Command Traditional

15. Market Economy: Capitalism USA, Japan, UK, South Korea, South Africa, Canada

16. Market economies: Capitalism  People/individuals answer the What, How, For Whom to Produce  The First Economist – Adam Smith laissez faire “leave it alone”  Invisible hand of self interest

17. Market Economies - Pros  Economy can adjust to change over time  Businesses can adapt to changing consumer tastes by creating new/different products.  High degree of individual freedom  Businesses and individuals are free to do what they want.

18. Market Economies – More Pros  Small degree of government interference (Mixed Economy)  Economic decisions are made by all, not limited to government officials.  Seemingly unlimited variety of goods and services available to consumers.

19. Market Economies - Cons  Does not provide for the basic needs of everyone.  Elderly, disabled and other groups would be unable to survive in a market economy without governmental assistance.

20. Market Economies – More Cons  Does not provide certain services that people value.  National Defense & Education.  High degree of uncertainty  Tommy Boy  Jobs going overseas  Market Failures

21. What 3 economic questions are asked when studying the similarities of a traditional, command and market economy among nations of the world? A. What to produce, why to produce, when to produce? B. What is your opportunity cost, what economic resources are needed, why should these resources be used? C. What to produce, how to produce, and for whom to produce? D. What is your opportunity cost, why are economic resources needed, when should these resources be used?

22. When a country has a market economy, which of these statements correctly defines this system? A. Workers are guaranteed a pay raise every year. B. The government controls most of the businesses in the country. C. Basic goods in the country are provided to all people without charge. D. Companies produce goods of their choice and consumers decide whether to buy the goods.

23. Which term best describes an economic system in which the people—not the government—own land, factories, and businesses? A.Communism B. Market C. Command D. Traditional

24. In a traditional economic system people usually exchange goods or services rather than use money. Which of the following is an example of this exchange process? A.charging goods on a credit card B. bartering with a seller C. paying for services by check D. using currency to pay

25. In which economic system are the production and distribution of goods owned by private individuals or corporations? A.traditional B. feudalism C. market D. command

26. Which of following best describes a market economy? A.A person can start any legal business and charge any price. B. The government provides food and housing to all workers. C. The government provides services, such as telephones and television. D. National businesses, such as airlines, are owned by the government.

27. A market economy is very different from a command economy. Which of the following is found in a market economy? A.Competition B. guaranteed yearly pay raises C. government control of industry D. government control of agriculture

28. In which economic system does a single authority decide what is produced? A.traditional B. Command C. Market D. Public

29. Which of the following explanations would reflect a country with a mixed economy (i.e., between a pure market and pure command)? A. Prices and wages are solely regulated by a country’s government. B. A combination of privately-owned industry and government control. C. A country’s distribution of resources is based on inheritance. D. Prices and wages are determined by the laws of supply and demand rather than being regulated by a country’s government.

30. The economic system of communist countries is most closely related to which of the following? A.command B. market C. traditional D. supply and demand