economic systems explained
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Why are we learning about economies?
• Because economies have a huge impact on the way people live!
• Occupy movements/ Election
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Which economic term is used to describe a lack of a particular resource, such as water, food, or oil?
A supplyB demandC scarcityD surplus
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System Who decides what to produce?
Who decides how to produce?
Who decides who is going to produce?
Key Words and
Examples
Traditional
Command
Market
Mixed
Economic Systems
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System Who decides what to produce?
Who decides how to produce?
For whom to produce?
Traditional
- Customs and traditions of the past
are used to determine what
goods to produce
- Customs and traditions of the past
are used to determine how to produce
goods
-Jobs are handed down from
generation to generation.
-People produce what they need
to survive
If your father and grandfather were farmers then YOU would be a farmer
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Traditional Economies
Key Words and examples• Tradition• People barter• Examples: parts of Africa,
the Aborigines in Australia, parts of Latin America
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In a traditional economy what decides what people produce?
a. Supply and demand b. The government c. Traditions and customsd. Teachers
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System Who decides what to produce?
Who decides how to produce?
For Whom to Produce?
Command
- The governments decides what the
country is going to produce
- The government regulates production
of all goods
- The government decides how the
country will produce their goods
- The government regulates ALL
industries
-The government decides for whom
to produce
- The government would decide who would be farmers, what they would grow, and how much would be turned over to the
government.
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Command Economies
Key Words and Examples • The government makes all
economic decisions • Communism • Examples: Cuba, North
Korea, any communist country
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The economic system of communist countries is most closely related to which of the following:
A Command economy.B Market economy.C Traditional economy.D Mixed economy.
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System Who decides what to produce?
Who decides how to produce?
For Whom to produce?
Market
Consumers decide what goods will be produced,
because they are the “need” for the goods
Individuals and businesses will make products, and provide
services that will earn a profit.
Prices and profit are determined by
supply and demand.
“Consumers are king!”
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Market Economies
Key Words and Examples • Same as capitalism –
economies based on free trade (competition or the right to make a profit)
• Examples of this Economy: No true market economies, but United States and United Kingdom are closest
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A market economy is very different from a command economic system or a traditional system. Which of the following is found in a market economy?
A Free laborB Free enterpriseC Government control of industryD Government control of agriculture
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System Who decides what to produce?
Who decides how to produce?
For whom to produce?
Mixed- The citizens decide
what goods the country will produce
- Citizens, prices, and profits all decide how goods are going to be
produced
-The Government also regulates some
industries
-There is free enterprise so the citizens have to
compete for production
Examples and key words: - Free enterprise but some government controlFrance, Spain, and most nations