ECONOMY VOCABULARY Standards SS6E1, SS6E2, SS6E3, SS6E5, SS6E6, SS6E7.
On the Index Card - ewasocialstudiesewasocialstudies.com/styled-2/files/economic-systems.pdf ·...
Transcript of On the Index Card - ewasocialstudiesewasocialstudies.com/styled-2/files/economic-systems.pdf ·...
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1. Write 3 things that you know about the word “Economy”
2. Write 2 things that you know about the word “System”
3. Write 1 thing that you know about the word “Resources”
On the Index Card
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Economic Systems SS6E5 The student will analyze different economic systems. a.Compare different types of economic systems: traditional, market, command and mixed.1 – what to produce, 2 – how to produce, and 3- for whom to produce. b.b. Explain how most countries have a mixed economy located on a continuum between pure and market and pure command. c.c. Compare the basic types of economic systems found in United Kingdom, Germany, and Russia.
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Essential Question
■ Write down this Essential Question: ■ How do traditional, command, and
market economies answer the economic questions of what to produce, how to produce, and for whom to produce?
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What is Economics?■ Economics: Studies the choices of
people trying to satisfy their wants in a world of scarcity
Oil & fuel
Land
Doctors
Technology
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WHAT ARE SOME THINGS YOU WANT THAT ARE SCARCE?
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Economic QuestionsEconomic Systems determine three
questions: ■ WHAT goods will be produced? ■ HOW will the goods be produced? ■ FOR whom will the goods be produced?
The way a society answers these questions determines the economic system
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What is an ECONOMIC SYSTEM?
■ The way a society answers WHAT goods will be produced, HOW will the goods be produced, and FOR whom will the goods be produced
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Economic Systems determine three questions:
▪ WHAT TO PRODUCE? (What kinds of goods and services should be produced?)
▪ HOW TO PRODUCE? (What productive resources are used to produce goods and services?)
▪ FOR WHOM TO PRODUCE? (Who gets to have the goods and services?
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Influences of Economy Growth■ Economic Resources
■ Natural Resources – raw materials found in nature that are used to produce goods ■ What are examples of some NATURAL
RESOURCES? ■ Human Resources – people’s knowledge,
efforts, and skills used in their work ■ What are examples of some HUMAN
RESOURCES?
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Influences of Economy Growth■ Economic Resources
■ Capital Resources – used to produce goods and services (buildings, materials, and equipment) ■ What are examples of some CAPITAL RESOURCES?
■ Entrepreneurial Resources - recognize the need for new goods or service ■ What are examples of some ENTREPRENEURIAL
RESOURCES?
■ Scarcity – shortage of resources
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Why Economic Systems?■ Nations use economic systems to determine
how to use their limited resources effectively.
■ Primary goal of an economic system is to provide people with a minimum standard of living, or quality of life.
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3 Basic types of Economic Systems
■ 1. Traditional Economy ■ 2. Market Economy (free enterprise) ■ 3. Command Economy ■ Mixed Economy - not considered an economy by
itself; just a blending of two different types of systems
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Traditional Economy The Old Way!
■ Found in rural, under-developed countries– ■ Inuits of Canada ■ Pygmies of Congo ■ Eskimos & Indian tribes ■ Belarus
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Traditional Economy▪ Who decides what to produce?
▪ People follow their customs and make what their ancestors made
▪ Who decides how to produce goods & services? ▪ People grow & make things the same way that their
ancestors did ▪ Who are the goods & services produced
for? ▪ People in the village who need them
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Traditional Economy The Old Way!
■ Advantages: people have specific roles; security in the way things are done
■ Disadvantages: Technology is not used; difficult to improve
People will make what they always made & will do the same
work their parents did
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Market Economy (Free Enterprise) – The Get Rich Way!
▪ Who decides what to produce? ▪ Businesses base decisions on supply and
demand and free enterprise (PRICE) ▪ Who decides how to produce goods
and services? ▪ Businesses decide how to produce goods
▪ Who are the goods and services produced for? ▪ consumers
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Market Economy (Free Enterprise) – The Get Rich Way!
■ Also called a Free Market Economy or Free Enterprise Economy
■ Businesses and consumers decide what they will produce and purchase and in what quantities
■ Decisions are made according to law of supply & demand
■ Supply and demand of goods and services determine what is produced and the price that will be charged.
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Market Economy (Free Enterprise) – The Get Rich Way!
■ Advantage—competition to have the best products and services
■ Disadvantage—huge rift between wealthy and poor
There are no truly pure Market economies, but the United States is close.
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Command Economy – The Government Way!
▪ Who decides what to produce? ▪ Government (central authority) makes all economic
decisions ▪ Who decides how to produce goods and
services? ▪ Government decides how to make goods/services
▪ Who are the goods and services produced for? ▪ Whoever the government decides to give them to
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Command Economy – The Government Way!
■ Strong Command – where government makes all decisions (communism – China, Cuba)
■ Moderate Command – where some form of private enterprise exists but the state owns major resources (socialism – France and Sweden)
Two types:
This system has not been very successful. More and more countries are abandoning it.
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Command Economy – The Government Way!
▪ Governmental planning groups determine such things as the prices of goods and services as well as the wages of workers
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Command Economy – The Government Way!
■ Advantages ■ Guarantees equal
standard of living for everyone
■ Less crime and poverty
■ Needs are provided for through the government
■ Disadvantages ■ Minimal choices ■ Fewer choices of
items ■ No incentive to
produce better product or engage in entrepreneurship
■ Also known as a Planned or Managed Economy
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Mixed Economy – The Combined Way!■ Combination of a
market and a command economy
■ Most nations have a mixed economy: United States, England, Australia
■ Government takes care of people’s needs
■ Marketplace takes care of people’s wants
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Mixed Economy – The Combined Way!
■ Advantage—balance of needs and wants met by government and in marketplace
■ Disadvantage—citizens have to pay taxes
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Economic Continuum■ A line going from one extreme to the other extreme. ■ % is based on how much of the economic system is market vs
command. ■ The higher the percentage = more economic freedom and the
lower the percentage = less economic freedom ■ Where are countries on the economic continuum? U.K Germany 79% 71%
Russia O% 51% 100% PURE ______________________________________________ PURE COMMAND MARKET
Canada 81%
Brazil 57%
Cuba 28%
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Economic Continuum■ A line going from one extreme to the other extreme. ■ % is based on how much of the economic system is market vs
command. ■ The higher the percentage = more economic freedom and the
lower the percentage = less economic freedom ■ Where are countries on the economic continuum? U.K Germany 79% 71%
Russia O% 51% 100% PURE ______________________________________________ PURE COMMAND MARKET
Canada 81%
Brazil 57%
Cuba 28%
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Index Card NAME!!
3- Basic Types of Economies 2- Examples of Mixed Economy
1-Define Economics
Ticket Out the Door