Teacher Page

1. Teacher Page Overall Objective: Students will understand the processes that influence political divisions, relationships and policies. • Topic A – What is Economics? • Topic B – Types of Economics • Activity 17:1 – Classify Economies • Activity 17:2 – Economic Systems Quiz • Activity 17:3 – M&M Economics • Activity 17:4 – Shoe Factory Economics • Activity 17:5 – Traditional vs. Industrial Economies • Activity 17:6 – Two Cows Economics BORDERS AND POWER PRESENTATION This presentation is shorter than some others by design. This section will take a lot more time on the teachers part explaining and using examples. Students need to see a lot of practial application of these terms, use their real life as examples to help them understand wherever possible.

2. ECONOMIC SYSTEMS Jarrett Book: Chapter 17 (276 – 291)

3. Essential Questions How do different societies around the world meet their economic need? What are the advantages and disadvantages of each economic system?

4. Important Ideas • Economics is a study of how people meet their basic needs. • All societies must answer three questions: • What should be produced? • How should it be produced? • Who gets what is produced? • The answers to these questions determine its type of economic system. • Specific countries can be classified by the type of economy they have.

5. What is economics? Lets go with this definition: “Economics is the study of how individuals, businesses, and nations make things, buy things, spend money, and save money.” Can you think of one word or maybe a phrase that simplifies this definition? If not, can you at least make it easier to understand? Give it a try!

6. The Problem of Scarcity 3 Years ago I want a cell phone • Economics involves a lot of math, but it also depends a lot on human behavior. It is hard to predict what people will do with their money. • Scarcity is an economic problem. When something is scarce, we do not have enough of it. • Since people always want new and different things, it will be impossible for a society to make enough to always fill every need. Therefore, scarcity will always be an economic concern. 1 Year ago I want an Iphone 4 This Year I want an Ipad We will always want the next thing!

7. Lets make sure you know a few key terms before we go any further: Goods Services Things people make. This could be a factory or in some sort of cottage industry Things that people do for others. Lets say you had ten billion dollars? Do you think you could end the problem of scarcity in the world? Why or why not?

8. Economics boils down to three basic questions: What should be produced? Who should get it? How should it be produced? The answers to these questions determines the economic system Traditional Economy Free Enterprise Communist System Socialist System

9. People are free to take part in any legal business, buy or sell any legal product. Custom and Tradition determine what will be produced. Traditional Economy The production of goods is based on custom and time honored methods; new ideas are often discouraged. Often there is no private property; things are often owned by a family or village in common.

10. So how does this look? Subsistence Agriculture Subsistence Farming in Sub-Saharan Africa Subsistence Fishing in Sri Lanka (Near India) Amcaja, Creative Commons 3.0. July 2005. The people in traditional economies usually only grow enough food to feed their family or village. Any animals they keep are used in the same way, gathering milk and eggs as a source of food. Many people use subsistence fishing as a means of support as well.

11. So how does this look? Cottage Industry In traditional economies, people often create handmade products such as clothes, furniture or other products that can be sold or traded to help sustain their families or village. During times of the year where crops are not plentiful, this can help a family survive.

12. Today, there are very few traditional economies left in the world. However, there are individual families or small groups, even in the United States, that practice that way of life. Berber Tribe in Algeria Bush People of the Kalahari Desert Hunters in Tanzania Most cultural groups that practice traditional economies do so by choice. Though it may seem foreign to us, it is the oldest type of economy in the world.

13. People have the right to own private property with limited government interference Goods and Services are produced to meet the needs of the members of the family or tribe. Free Enterprise System The ability to make profits is what drives people to risk their money in starting new business. The interaction of supply and demand determines prices in a free market economy .

14. So how does this look? Commercial Agriculture and Industry Hinrich. Creative Commons 2.0. September 2008. Unlike cottage industries or subsistence farming, commercial businesses are designed to generate profit. Technology in every industry, including agriculture, is developed in response to this need for profit.

15. Most every major democracy in the world practices some form of the free enterprise system. People often call it capitalism. Most of the stronger economies in the world promote the free enterprise system (US, Great Britain, France, Chile, Canada, Japan, Germany, Singapore, etc.). FREE Democracy The interaction of supply and demand determines prices in a free market economy .

16. All major decisions on production, distribution and the use of resources are made by the government. Private property is abolished; national ownership of the all land, factories, farms, and major resources. Communism The goal is to achieve a classless society – equality among all workers. Communism is based on cooperation; all workers should join together and share equality.

17. So how does this look? Communist Factory The Zaz A factory in a communist system would often make one item which would be the same for everyone. Typically, the government might decide which car everyone would drive, what kind of clothes they might wear, etc. All industrial decisions were made to be what was “best for the people”. All factories had controls put on them from the government.

18. The most well known communist government in history was the Soviet Union. This was a group of countries, including Russia, that formed together to be the largest in the world. The government of Soviet Union collapsed in 1989, and today Russia and the other countries abandoned communism for a more free system. Today, China, North Korea, Cuba and Vietnam all maintain communist systems, but many of those governments, especially China, have allowed some economic freedom within their society.

19. The government makes decisions about production, distribution, and use of resources Other decisions are made privately. The government should end poverty by taking control of the nation’s resources and providing public services. Socialism Socialism seeks a fair distribution of income. People’s basic needs are made for free or at very low cost. Major industry is owned by the government. Other property is held privately.

20. So how does this look? Socialism is very similar to communism in many of its philosophies, but socialism promotes private ownership of small businesses. A small factory could be owned by an individual, but a large industry that is essential such as banks, airlines, mines, etc. must be controlled by the government, which would provide the people with the services they needed to survive. Government Owned Large Factory Privately Owned Small Factory

21. Sweden and Israel base there economies on the idea of socialism, but they do have elements of free enterprise as well. Many countries throughout Europe have socialist elements, but they have began to move toward more private ownership over time.

22. MIXED ECONOMIES No country or region of the world practices one single type of economy. Depending upon a lot of different factors, each country blends these different economic systems together. If a country is ruled by a totalitarian government system what type of economy are they likely to have? If a country has a democratic government system what type of economy are they likely to have? QUICK REVIEW!