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Chapter 5

Chapter 5. What is an Economy?. Economy. The way a nation will use its resources to produce and distribute goods and services. Common Resources. Land –everything on earth in its natural state Includes what’s in the ground and under water Labor – everyone that works

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Chapter 5

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  1. Chapter 5 What is an Economy?

  2. Economy • The way a nation will use its resources to produce and distribute goods and services

  3. Common Resources • Land –everything on earth in its natural state • Includes what’s in the ground and under water • Labor – everyone that works • Capital – money and goods used in the production process • Infrastructure – physical development of a country • Entrepreneurship – skills of the people who are willing to risk their time and money to run a business • Scarcity – not enough resources to cover needs and wants

  4. Economic Questions • Answers define economic system • What should be produced • How should product be produced • For whom should products be produced • How much should be produced

  5. Types of Economies • Market – no government involvement • Command – government control factors of production • Mixed – elements of both

  6. Political Philosophies • Capitalism – characterized by private ownership • Most frequently associated with democracy • Socialism – increased government involvement • Tries to keep prices low & provide jobs • Tend to have more social services • Communism – government run everything

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