1. Economic Systems Types of markets!

2. Definition… ● An economic system is a system for producing, distributing and consuming goods and services that comprise the economic structure of a given society or community.

3. This is an umbrella term for… ● planning, coordination, and reform; productive enterprises; factor and product markets; prices; population; national income, product, and expenditure; money; inflation; international trade, finance, investment, and aid; consumer economics; welfare and poverty; natural resources; energy; environment; regional studies; political economy; legal institutions; property rights ● A LOT

4. Economic Systems ● Three Decisions: ◦ What goods & services should be produced? ◦ How should they be produced? ◦ Who gets the goods & services when they are produced? ● Traditional Economy – economic decisions based on traditions ◦ Pro: People can provide for themselves ◦ Con: Low standard of living

5. Economic Systems Continued… ● Market Economy (Capitalism) – economic decisions based on the market (supply and demand) ◦ Pro: Lots of goods & services available ◦ Con: Unstable (Growth and then recession) ● Command Economy – government makes all economic decisions (Socialism and Communism) ◦ Pro: Ensures full employment ◦ Little incentive to work ● GDP = Gross Domestic Product – monetary valued of all a country’s goods and services produced in a year ◦ GDP Per Capita ($ per Person)

8. Other Economic Systems…. ● Market economy ("hands off" systems, such as Laissez- faire (“Let it be” capitalism) ● Mixed economy (a hybrid that blends some aspects of both market and planned economies) ● Planned economy ("hands on" systems, such as state socialism or state capitalism) ● Traditional economy (a generic term for older economic systems) ● Command (Centrally Planned) Economic Systems: (a generic term for older economic systems) ● Participatory economics (a system where the production and distribution of goods is guided by public participation) ● Gift economy (where an exchange is made without any explicit agreement for immediate or future rewards) ● Barter economy (where goods and services are directly exchanged for other goods or services) ● Lots more…

9. What about the American Economy? ● Make a guess.

10. We’re a MIXED Economy! ● MIXED! The United States has a very successful mixed economy, wherein the private sector is flourishes and the state also makes several decisions on behalf of citizens. ● The US economy’s means of production is mostly done under the private sector. (Wealth is generated by private business) ● The government has influence over the economy through fiscal and monetary policies designed to counteract economic downturns and capitalism's tendency toward financial crises and unemployment.

11. Economic Systems in Context ● The economic system of a specific country has everything to do with the social system, law system, political system, and the general culture. ● Strong correlation exists between the ideologies (beliefs and religion) of the majority of the people in a specific place ● One cannot be separated from the other at times…(like a PB&J).

12. Questions?

13. Application  In your textbook, turn to page 40 and complete the Graphing Exercise (#6).  Tomorrow, you will pick a country to research and report on the type of economy that is found there. Bring in your computers or cell phones to use as research tools!