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Essential Questions

Essential Questions. What is economics? What are the components of modern economic systems?. Economics. The study of how people choose to use their limited resources to meet their needs and wants.

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Essential Questions

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  1. Essential Questions What is economics? What are the components of modern economic systems?

  2. Economics The study of how people choose to use their limitedresources to meet their needs and wants.

  3. Societies must choose an economic system to reach their economic goals. To help them do this, they have to answer key questions.

  4. Three Economic Questions

  5. ECONOMIC SYSTEM

  6. Defined ... The method used by a society to produce and distribute goods and services

  7. Classifying Countries • Developed Country • Emerging Market • Newly Industrialized Country • Developing Country • Highly industrialized, highly efficient, and whose people enjoy a high quality of life • Newly industrialized countries plus those with potential to be newly industrialized • Recently greater national production and exports from industrial operations • Poor infrastructure and extremely low personal income

  8. Modern Economic Systems Centrally Planned (Command) Free Market Mixed • Command • Mixed • Market

  9. Traditional ... • People make economic decisions based on custom or habit. • Agriculturally based. • They produce only what they need. • Mainly in rural areas of developing nations.

  10. Market ... • Mostly private (individual or business) ownership of economic resources. • Economic decisions are made by the marketplace – supply & demand. • Called capitalism, free-enterprise • Government is involved in many ways.

  11. Other names for Market Economies • Capitalism • Free – Enterprise • FreeMarket

  12. Centrally Planned ... • Economic resources owned by the government – most land, factories, and other resouces. • Central government planners make most economic decisions for the people. • Education, health care, and welfare services are provided • Called command, socialist, or communist

  13. Other names for Centrally Planned Economies • Command • Socialist • Communism

  14. Mixed ... • A mix of socialism and free enterprise in which the government plays a significant decision making role. • Resources are spilt rather evenly. • Called social democratic, liberal socialism

  15. Other names for Mixed Economies • Social Democratic • Liberal Socialist

  16. A Closer Look …

  17. Capitalism • Private ownership of natural resources & capital goods • Values individual choice & initiative

  18. Government keeps its “hands off” business (laissez-faire)

  19. This promotes competition Prices are stable

  20. The forces that determine prices of goods and services in a market economy is called Supply & Demand

  21. Socialism • Gov’t controls part of the economy • Values community rather than profit

  22. Government provides services for people (health care & social security)

  23. Communism Socialism + A Dictator

  24. One-party rule, gov’t ownership of the means of production, and decision making by centralized authorities. Goal? A classless society (everyone is equal)

  25. Individual rights don’t exist Good of the many surpasses the rights of an individual

  26. Concepts of competition & profit are rejected Everyone contributes & receives the same amount

  27. Mixed • Combination of socialism and free enterprise. • Gov’t plays a significant role in making economic decisions.

  28. Quick Recap • Modern Economic Systems • Traditional • Centrally Planned • Mixed • Free Market • Economic System Types • Capitalism • Socialism • Communism • Mixed

  29. Which economic system do you think is best for a country? Your response must be at least 75 words and provide at least two reasons for your choice.

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