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The Free Market

The Free Market. Why Markets exist. Market is an arrangement between buyers and sellers Specialization Buying and selling. Free Market Economy. FME is a system based on the voluntary exchange between buyers and sellers. Households and firms Factor Markets Product Markets.

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The Free Market

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  1. The Free Market

  2. Why Markets exist • Market is an arrangement between buyers and sellers • Specialization • Buying and selling

  3. Free Market Economy • FME is a system based on the voluntary exchange between buyers and sellers. • Households and firms • Factor Markets • Product Markets

  4. The Self Regulating Nature of the Market Place • Self-Interest • Competition • The Invisible Hand

  5. Advantages • Econ Efficiency • Econ Freedom • Economic Growth • Additional Goals

  6. Centrally Planned Economy

  7. How is a Centrally Planned Economy Organized? • In a CPE is controlled by the central government and not by the market place. • Gove Control the factors of production • Socialism and Communism

  8. The USSR • Prior to 1917 Russia was a Monarchy- The Romanovs • 1917: Russian Revolution; Vladimir Lenin • Lenin took his political and economic ideals from Karl Marx • Soviet Agriculture • Soviet Industry • Soviet Consumer

  9. Problems with CPE • Performance falls short of ideals • Do not reward innovation • Lack economic flexibility

  10. Modern Economics

  11. The Rise of the mixed Economy • Limits of Laissez Faire • Balance Control and Freedom

  12. Comparing Mixed Economy • Mixed Economies where government intervention dominates North Korea, Cuba and China • Mixed economies where markets dominate Great Brition, Canada and the US.

  13. US Economy • Mixture of Free market and government intervention. • It is a reflections of the American polotical dichotomy. Rep: Free Market Dem: Government

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