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Types of economies

Types of economies. HW check: RB, p 59. 1 pie chart 2 bar chart 3 plan 4 flow chart 5 line chart 6 drawing / illustration 7 table 8 diagram. What is economy?. The system by which a country's goods & services are produced and used. Problem? Concerning resources and wants ...

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Types of economies

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  1. Types of economies

  2. HW check: RB, p 59 • 1 pie chart • 2 bar chart • 3 plan • 4 flow chart • 5 line chart • 6 drawing / illustration • 7 table • 8 diagram

  3. What is economy? • The system by which a country's goods & services are produced and used. Problem? Concerning resources and wants... • The resources are scarce and the wants are unlimited. The function of economy? • To allocate scarce resources amongst unlimited wants.

  4. What... How... For whom... should be produced? should it be produced? should it be produced? To satisfy wants we need to answer three questions: How these questions are answered will depend on the type of economic system.

  5. The three basic types of economic systems: • Market economies(or capitalist economies or free enterprise economies) • Planned economies(or command economies) • Mixed economies • Take 2 min and brainstorm words you associate with eachtype – makelists

  6. → RB, p 17 • Read the intro • Read the text on market economies

  7. Market economies • Resources are allocated through _______ mechanism (supply and ________) • System which stimulates _________

  8. Competition inmarket economies • leads to lower ______ (prices), • better ______, • more ______ for consumers

  9. The role of the state inmarket economies: • to _____ laws • to provide _______ goods and services (e.g. j_ _ _ _ _ ary, national d_ _ _ _ ce, policing, fair competition)

  10. Imperfections of market economies • Private firms not interested in _______ that do not make profit. • Public interest ____________ to achieve lower costs. • _______ distribution of income.

  11. → RB, p 17 • Read the text on planned economies

  12. Planned economies (or command economies) • The role of the state - ____ • The state: - organizes - plans - co-ordinates the whole _________ process

  13. There is no competition... • __________ goods • Little ______/ choice for consumers • The state _______ goods & services • More ______ distribution of income

  14. In planned economies... • Production for _____ rather than profit • People less motivated to work _________ • The standard of living _____ than in other types of economies

  15. → RB, p 17 • Read the text on mixed economies

  16. Mixed economies • Some resources _________ by the state (in the _____ sector), the rest by the market system ( ______ sector) • Public sector: responsible for _______ goods & services • Private sector: production decisions ______ by firms (demand for gods)

  17. In mixed economies... • ______ goods provided free • The state ensures _____ competition • Private goods & services allocated as in _____ economies. • HW: RB, p 18

  18. The role of the government: MK, U 22 (p 109) • Do governmentshavetoomuch power? Governmentinvolvement Governmentinterventionintheeconomy Governmentinterference be /getinvolvedin intervenein interferein / with Every act of governmentinterference withbusiness must indirectly affect consumption.

  19. Additional reading for the ambitious  Reasons for government intervention in the market • http://wps.pearsoned.co.uk/ema_uk_he_sloman_econbus_3/18/4748/1215583.cw/

  20. Which of the following activities could be left to the private sector in Croatia? • Education • Health care • Low-income housing • Defence • The police, the justice system, prisons • Public transport • Social security (unemployment & sickness benefits, old age pensions) • Working conditions (working hours, child labour...) • Health, safety and cleanliness regulations Private sector (disciplines of the maket, deregulation)

  21. Which of the following activities could be left to the private sector in Croatia? • Education • Health care • Low-income housing • Defence • The police, the justice system, prisons • Public transport • Social security (unemployment & sickness benefits, old age pensions) • Working conditions (working hours, child labour...) • Health, safety and cleanliness regulations → RB, p 19 Private sector (disciplines of the maket, deregulation)

  22. RB, p 19Reading: The role of government

  23. HW • Reader, p 18: do exercises I – IV • Don’t forget: Notes on RB, p 15 • MacKenzie, pp 109-110 - read the extract from the Friedmans book FREE TO CHOOSE for a different perspective on the role of government & answer the questions

  24. Optional HW (for extra credit): Prepare a short talk for next week (seminar) (100 words: intro, body, conclusion + phrases from pp 53-54) on one of the following topics: • a football / hockey / basketball... match • your hobby (dancing, chess, volunteering...) • why you are studying economics/business • is Kovač going to pull it off...

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