Economic Economic SystemsSystems

Ms. RamosMs. Ramos

Alta Loma High SchoolAlta Loma High School

In truth, all In truth, all economics today areeconomics today are

MixedMixed

The economic system The economic system in which children are in which children are likely to carry on the likely to carry on the

economic roles played economic roles played by their parents is by their parents is

called acalled aTraditional Traditional economyeconomy

In his book In his book Wealth of Wealth of NationsNations, Adam , Adam

Smith explained howSmith explained how

Markets regulate Markets regulate economic activityeconomic activity

The economic The economic condition that exists condition that exists between businesses between businesses that sell the same that sell the same product is calledproduct is called

Competition Competition

A contract is an A contract is an agreement that isagreement that is

Legally binding Legally binding

Economies that are Economies that are closest to the pure closest to the pure market model are market model are

classified as classified as

CapitalistCapitalist

Ownership of private Ownership of private property is a property is a

characteristic ofcharacteristic of

Free enterprise Free enterprise

The economic The economic system in which the system in which the governments role is governments role is

most limited ismost limited is

CapitalismCapitalism

In the circular flow In the circular flow model, the exchange model, the exchange of goods and services of goods and services in the economy are in the economy are represented by the represented by the

Product marketProduct market

The standard of The standard of livingliving

Is measured as how much on average Is measured as how much on average ever person in a country is able to ever person in a country is able to consume in a specified period of time.consume in a specified period of time.

Insuring bank Insuring bank deposits is an deposits is an

example of the example of the pursuit of the goal of pursuit of the goal of

economiceconomicSecuritySecurity

Scarcity of resources Scarcity of resources leads the U.S. leads the U.S.

economy to pursue economy to pursue the goal of the the goal of the

economic economic efficiencyefficiency

If the number of workers in If the number of workers in the population grows faster the population grows faster than the average production than the average production of each worker, the standard of each worker, the standard

of living willof living will

FallFall

System where the System where the government/powerfugovernment/powerfu

l ruler decide prod l ruler decide prod and consumptionand consumption

Command economyCommand economy

System were the System were the government and government and individuals are individuals are

involved in prod involved in prod and consumptionand consumption

Mixed economyMixed economy

System where the System where the means of prod are means of prod are mostly privately mostly privately

owned and operated owned and operated for profitfor profit

Free marketFree market

The way a country The way a country sets up the sets up the

production and production and consumption of G&Sconsumption of G&S

Economic systemEconomic system

System were the System were the producers and producers and

consumers make consumers make econ decisionsecon decisions

Market economyMarket economy

Income when one Income when one sells or rents a sells or rents a

factor of production factor of production

Factor paymentFactor payment

System where System where custom/ tradition custom/ tradition

determines determines production and production and consumptionconsumption

Traditional economyTraditional economy

Who gets what? How do societies decide?

Every society is faced with three economic questions: What goods and services should be produced? How should they be produced? Who should get what is produced? How a society answers those questions depends on its economic goals. These goals include economic freedom, efficiency, equity, growth, security, and stability.

L2: What? How? For whom? L3: Need 5: economic freedom,

efficiency, equity, growth, security, and stability

How do mixed economies divide the decision making?

Most countries today have a mixed economy, in which both the govt and indiv have a voice in economic decisions. Who decides what varies greatly. Some countries, incl the US, min govt regulation of the mkt. Others, like China, still exercise considerable govt control over economic activities.

L2: authoritarian socialist (Communist), capitalist, democratic socialist

L3: auth soc: Govt owns/controls almost all factors of prod-command), capitalist: Indiv own factors of prod- market, dem soc: Govt owns some factors of prod- lmt key industries: elec, phone- market

What are the key characteristics of the US economic system?

L2: Need 5: economic freedom, limited government, competition, binding contracts, equal opportunity, profit motive, and property rights.

L3: economic freedom (Laissez-faire/choose job, live, products), limited government (regulates w/o controlling indiv, firms, or mkts), competition (Firms are free to compete- benefits the consumer), binding contracts (Right to enter & legal), equal opportunity (Legal right to seek education & compete in marketplace), profit motive (Provides incentive to work and create new businesses), and property rights (Right to sell, buy, & control the use of our “property”).

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