1 / 33

Economic Systems

Explore the different economic systems - traditional, command, market, and mixed - and learn how they attempt to answer the three major production questions. Understand the strengths, weaknesses, and roles of government in each system.

kcollins
Télécharger la présentation

Economic Systems

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Economic Systems

  2. Scarcity Means There Is Not Enough For Everyone Government must step in to help allocate (distribute)resources

  3. The 3 Major Production Questions • What to produce? • How to produce? • For whom to produce? We will classify economic systems into categories, based on how each of them attempts to answer these three questions.

  4. Traditional Economy • The answers to the three major production questions are dictated by ritual, habit, or custom.

  5. INUIT

  6. Where might you find a Traditional Economy? Examples of Traditional Economies: • Inuit tribe • Some parts of South America • Some parts of Africa • Aboriginal tribes of Australia • Some island societies • All are remote

  7. Traditional Economies Disadvantages? • Less growth/wealth • Less choice/variety • Lack of motivation • Uncertainty • Resource Curse Advantages? • Simple • Defined roles • Strong community • Self-sufficient • Specialization

  8. Command Economy • The answers to the three major production questions are given by some strong central authority (i.e. the government) • What is the “–ism” that comes to mind? • Communism – an economic system in which all factors of production are the property of the state. • Examples of Command Economies?

  9. Examples of Command Economies • Cuba - ??

  10. Examples of Command Economies • North Korea

  11. Command Economies Weaknesses • Lack of incentive • …to work hard • …to innovate • Low quality goods • Less variety • Corruption • Difficult to plan successfully Strengths • Able to plan • More equality(??) • Safety net • Can adjust quickly

  12. Market Economy • Businesses and individuals act in their own best interest to answer the three major production questions. • What is the “–ism” that comes to mind? • Capitalism – an economic system in which individuals and businesses compete, with a minimum of government interference • Based on this definition, is the United States a “capitalist” economy? • “Laissez-Faire” – hands off

  13. Market Economies Weaknesses • Unequal • Consolidation of wealth/power • Doesn’t provide for everyone • No safety net Strengths • Economic freedom • Efficiency • Strong incentives • …to work hard • …to innovate • High quality goods • More variety

  14. Mixed Economies • Mixed-Market • Socialism • Economies in Transition Kinda, but not really

  15. Total Economic Freedom Little Economic Freedom Capitalism Communism Socialism Mixed-Market Total Government Control No Government Control

  16. 2017 Index of Economic Freedom:

  17. 2009 Index of Economic Freedom: The Top 10 http://www.heritage.org/Index/

  18. Bottom 8

  19. Role Players in the Mixed-Market Economy • Consumers • Producers • Government – What 5 roles does the government play in our economy? • Consumer • Producer • Protector • Regulator • Provider

  20. 7 Economic & Social Goals of Mixed-Market Capitalism in the U.S. • Economic Freedom • Economic Equality • Economic Security • Economic Growth • Economic Efficiency • Price Stability • inflation and deflation • Full Employment • Does this mean everyone has a job? • No. There is a Natural Rate of Unemployment …of opportunity**

  21. Characteristics of Free Enterprise Capitalism • Economic Freedom • Voluntary Exchange – who has more power, producers or consumers? • Consumer Sovereignty: The consumer drives the market – DOLLAR VOTES • “The customer is always right!” • Private Property Rights • The Tragedy of the Commons – solutions? • Profit Motive/Self-interest • Competition • Markets and Prices • Specialization/Division of Labor

  22. Communism Capitalism vs.

  23. Communism Capitalism vs.

  24. “From each according to his ability, to each according to his needs!” • Karl Marx • Critique of the Gotha Programme, 1875

  25. Communism 200 words - Communism: How/Why does it rise? How/Why does it fail? How could it succeed?

  26. Economic Freedom Economic Equality Cooperation / Collectivization Competition Supply & Demand Government Planning Public Property Private Property Patriotism: The Good of Community Profit Motive

  27. Why Doesn’t It Work? • Incentive Problem • Average Test Scores Example • Soviet Tanks • Coordination Problem • 30 kids in classroom vs. 400 kids in auditorium • In one word, why doesn’t it work? GREED

  28. “As for me, I am not a Marxist.” Karl Marx

  29. When CAN It Work? Opt In Small Groups

  30. Unit 2 Review Guide – Topic List • Three Production Questions • Traditional Economies • Strengths • Weaknesses • Market Economies • Strengths • Weaknesses • Command Economies • Strengths • Weaknesses • Roles of Government in Mixed Market • Goals of Mixed Market Capitalism • Voluntary Exchange • Private Property Rights • Tragedy of the Commons • Communism • Rise/Fall • When can it work? • Relevant Textbook Sections: • Chapter 2

More Related