1-3: Economic Systems

​1-3: Economic Systems

By Allen Stolte

The 3 Economic Questions

• What goods and services will be produced?

• What needs and wants will be satisfied with the goods and services produced?

• How will the goods and services will be produced?

What to produce?

Many factors can decide what is produced by a nation

• Climate of nations can affect ability to grow products

• Abundant vs Scarce natural resources (oil, coal, lumber, etc)

• Nations may decide to trade resources with other nations

• Education available

• Infrastructure (airports, highways, trains, shipping by boat, etc.)

How to produce?

As a country evolves tasks become more efficient

• In the U.S 200 years ago 80% of US citizens were involved in agriculture. Today less than 3% produce the food we consume

• Each country must decide how to use its resources to produce the goods and services it needs

What needs and wants to satisfy?

Wants and needs are unlimited so some will remain unmet.

• Countries must decide who they are trying to provide wants and needs for

Types of Economic Systems

The role of the government

• The type of system is based on how much the government is involved in the marketplace

Types of Economic Systems

Command Economy

• Resources are owned and controlled by the government

• Government decides what and how goods are produced

• Government decides how goods will be shared and distributed

• Personal economic freedom is limited

Types of Economic Systems

Market Economy

• resources are owned and controlled by the people of the country

• the 3 economic questions are answered by individuals through buying and selling goods and services in the marketplace

  • marketplace is anywhere goods and services exchange hands (supermarket, business office, mall, internet, etc.)

Types of Economic Systems

Market Economy

• consumers and businesses make decisions based on their own self interests

• Every purchase is like a "vote" with money

Types of Economic Systems

Traditional Economy

• goods and services are produced they way it has always been done

• used in countries that are less developed and are not yet participating in the global economy

• centered on meeting the basic needs of the people

Types of Economic Systems

Mixed Economies

• combine elements of the command and market economies

Multiple Choice

In what economy are resources owned and controlled by the people of the country?

• Market Economy
• Command

• Traditional

• Mixed

Multiple Choice

In what economy are resources owned and controlled by the government?

• Market

• Command

• Traditional

• Mixed

Multiple Choice

Communism would be an example of a command economy

• True

• False

Types of Economic Systems

The U.S Economic System

• best fits the market economy

• Capitalism is the name used for the U.S. Economic system

  • private ownership of resources by individuals rather than the government

  • Also called free enterprise or private enterprise

Types of Economic Systems

The U.S Economic System

• Individual freedom is vital to the success of the U.S. economy

• Based on 4 important principles

  • private property (as long as it does not violate the law)

  • freedom of choice

  • profit

  • competition

Multiple Select

The US economic system could also be called which of the following (select all that apply)

• Capitalism

• Free enterprise

• Agriculturalism

• Private enterprise

Poll

How would your rate your understanding of economic choices and economic systems?

• I got this. Bring on the test.

• I still have questions about what we are doing?