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Four Economic Systems Prezi

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Atiana Bowyer

on 11 March 2013

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Transcript of Four Economic Systems Prezi

The Four
Economic Systems Traditional
Economies Definition: Traditional economies rely on habits, customs, or ritual, to decide what to produce, how to produce it, and whom to distribute it to.

The traditional economic systems revolves around the family. Advantages for this type of economic system: Communities that tend to stay relatively small and close
Societies work to support entire groups, not just themselves or their immediate families
Agricultural and hunting practices usually lie at the very heart of the people's lives, laws, and religious beliefs Pages 26-27 Disadvantages for this type of economic system: Little room for innovation or change
Work tends to be divided by gender
Few mechanisms in place to deal with environmental disasters, such as floods or drought
May be slow to adapt to new technology or new ideas
May not have access to certain goods
Lack modern conveniences
Have a low standard of living Do you think this economic system promotes growth and innovation? Why? No, because it does not have access to certain goods, and lacks modern conveniences. It also is not up to date with new technology and new ideas, causing it to have little room for change and innovation. 2 Real World Events that use this type of economic system: Somalia: 80% of people are pastoral, or nomadic/semi-nomadic; nomads collect gums and resins from desert bushes for incomes; nomads raise goats, sheep, camels, and cattle

Nigeria: Agriculture is dominated by traditional smallholders who raise crops. These crops include sorghum, maize, cassava, yams, millet, rice and wheat. They trade other various items, including the above mentioned, for income. 3 Personal Experiences: When I was younger, I raised money for my school by selling See's Candies and gift wrapping paper.

Also, when I was younger, I raised money for my church by helping with bake sales.

When I go to Hawaii every year, I buy hand-made jewelry. Compare & Contrast:
Traditional & Mixed Economies Similarities: Traditional and mixed economies strive to benefit people and self-interest.
Both economies are self-sufficient.
Both have labor intensive methods.
Both produce goods for consumers to buy. Differences: Mixed economies use partial government involvement/intervention.
Traditional economies are not very innovative.
Mixed are up to date with new technology.
Traditional focus on culture, habits, and customs, causing them to have little to no change. Evaluate a problem in this economic system and what would be your solution.
State why? A problem with this economic system is a slower adaptation to new technologies and ideas.

A solution would be to make more room for change and innovation, and stay up to date with technology as much as possible, without losing the traditional sense. Mixed Economies Pages 27, 40-44 Definition: Mixed economies are systems that combine traditional and the free market with limited government intervention.

Most contemporary mixed economies blend the market with government intervention, or involvement, in the marketplace. Advantages for this type of economic system: Laissez faire: the doctrine that states that government generally should not intervene in the marketplace.
Existence of a government-funded social safety net
Welfare system for unemployed
Health care provided for the elderly (Medicare)
Federal minimum wage law Disadvantages for this type of economic system: Lower than optimum use of resources
Government mobilizes resources towards production of goods and services which are beneficial for the society as a whole
Private enterprises face difficulty because of various government loopholes
Lack of price control management can cause shortages Do you think this economic system promotes growth and innovation? Why? Yes, mixed economies are very innovative because of their connection to free market systems. They also promote growth because while they incorporate traditional values, they are up to date with new technology and new ideas. 2 Real World events that use this type of economic system: Canada: Canadian government manages the transportation, agriculture, and fisheries. Canada encourages specialization. Encouraging specialization will increase the efficiency of the industry and help in trading successfully.

Brazil: Brazil has large agricultural, manufacturing, and mining sectors. Some industries, like railroad and utilities, are privatized. Brazilian government owns more than 50% of the largest energy company in Brazil. 3 Personal Experiences: Government is in charge of administration of justice, education, the road systems, and national defense.

Government provides welfare and unemployment benefits to people who cannot support themselves.

Government pays for a lot of the cost of medical care for the elderly and those who lives in poverty. Compare and Contrast:
Mixed & Market Economies Similarities: Mixed and market economies allow a person the ability to prosper when their community is in decline.
Market economies are like mixed in the way that individual gain depends on the community's success.
Both economies allow for a higher standard of living.
Both economies also allow for better wages. Differences: Market economies contain price flexibility which allows for most prices to rise and fall based on the current level of supply and demand.
Mixed have a welfare system to support the unemployed.
Market economies are driven by supply and demand.
Mixed economies keep loss and gain to a minimum because the economy adapts to change. Evaluate a problem in this economic system and what would be your solution.
State why? A problem would be that the mixed economy's welfare system is beneficial to the unemployed, but it can be abused or taken advantage of and lead to a loss of government funds.

A solution would be to be more cautious when deciding whether or not someone should receive welfare benefits by conducting a drug test as well as personal questions and/or other testing. Atiana Bowyer, Robert Abbott

Economics
Miss Lopez - Period 1 Learning Targets:
I can.... compare and contrast the four economic systems that exist in the world and distinguish how each economic system influences capital
evaluate and critique how the four economic systems affect the world politically and economically http://www.voki.com/pickup.php?scid=7631997&height=267&width=200 <object height="267" width="200" classid="clsid:D27CDB6E-AE6D-11cf-96B8-444553540000"codebase="http://download.macromedia.com/pub/shockwave/cabs/flash/swflash.cab#version=9,0,28,0" id="widget_name"><param name="movie" value="http://vhss-d.oddcast.com/vhss_editors/voki_player.swf?doc=http://vhss-d.oddcast.com/php/vhss_editors/getvoki/chsm=833785d26395219cf087b26ca6269a57%26sc=7631997" /><param name="quality" value="high" /><param name="allowScriptAccess" value="always" /><param name="width" value="200" /><param name="height" value="267" /><param name="allowNetworking" value="all"/><param name="wmode" value="transparent" /><param name="allowFullScreen" value="true" /><embed height="267" width="200" src="http://vhss-d.oddcast.com/vhss_editors/voki_player.swf?doc=http%3A%2F%2Fvhss-d.oddcast.com%2Fphp%2Fvhss_editors%2Fgetvoki%2Fchsm=833785d26395219cf087b26ca6269a57%26sc=7631997" quality="high" allowScriptAccess="always" allowNetworking="all" wmode="transparent" allowFullScreen="true" pluginspage="http://www.adobe.com/shockwave/download/download.cgi?P1_Prod_Version=ShockwaveFlash" type="application/x-shockwave-flash" name="widget_name"></object> Our Voki The Three Economic Theorists Adam Smith: considered the "Father" of modern economics
wrote The Wealth of Nations in 1776, describing a market-based economy Cornerstone Economic Concepts: Voluntary Exchange - both parties in a trade must benefit
Free Enterprise - idea of a "free-market" where buyers and sellers are free to meet to do business as they please based on voluntary exchange
Minimal Government - leaders should interfere as little as possible in the economy and collect only enough taxes as to provide for things that free enterprise fails to produce. (This is called a market failure.)
Free Enterprise combined with Limited Government - allows a nation to become wealthy Invisible Hand Theory: In every transaction, the buyer and seller consider only their self-interest, or their own personal gain.

Self-interest is the motivating force in the free market.

Producers in a free market struggle for the dollars of consumers.

This is known as competition, and is the regulating force of the free market. John Forbes Nash, Jr. : a professor of economics at Princeton University
created a modern economic theory that contradicted Adam Smith's 175 year old idea of the "Invisible Hand" Governing Dynamics Theory: When working within a group, each member must do what is best for themselves as well as what is best for the group.
Otherwise, all in the group might get cut out of a possible solution to a complex problem. Also known as Nash Equilibrium
Currently governing dynamics (Nash's Game Theory) is used as a diplomatic strategy in global economics John Maynard Keynes: English economist, journalist, and financier
achieved his greatest fame as the author of "The General Theory of Employment, Interest, and Money" (1935-1936). As a result of the influence of this work, he became the most influential economist of the twentieth century.
Keynesian economies is a school of macroeconomic thought. In Keyne's theory, one person's spending goes towards another person's earnings, and when that person spends his or her earnings, he or she is, in effect, supporting another person's earnings. Incentives are in two forms. A profit is a monetary incentive and non-monetary incentives are gifts and services.

Competition and self-interest interacting within the laws of supply and demand in the free-market create the invisible hand, as everyone ends up benefiting.

The interaction of buyers and sellers, motivated by self-interest and regulated by competition, all happens without a central plan. When the Great Depression hit, people's natural reaction was to hoard their money.

Under Keyne's theory, this stopped the circular flow of money, keeping the economy at a stand still.

Keynes intended government to play a much larger role in the economy.

He argued that the government should step in to increase spending, either by increasing the money supply or by actually buying things itself.

He believed that supply is capable of outstripping demand, with the result that goods remain unsold, and production and employment are correspondingly cut back.

Government should be involved with economies by creating jobs and lowering interest rates by the Central Bank. A Beautiful Mind is a movie focusing on John Forbes Nash, Jr.'s schizophrenia, which makes him see people who not exist.

Nash viewed his disease as a problem of his mind that could be solved like a math equation.


The movie earned the 2001 Academy Award for Best Picture and for Best Actor (Russell Crowe as John Nash, Jr.). Free market Definition: It is an economic system in which prices are determined by unrestricted competition between privately own buisnesses Centrally Planned Economy Advantages for this type of economic system The market provides a wide variety of goods and services to meet the consumers wants.
It can respond quickly respond to the peoples wants.
Buyers are free to buy any commodity which they like.
The producer can also produce whatever product they want and how much they want to make of it.
Prices have the function to allocate and distribute a countries resources.
Producers are free to undertake the risks and rewards associated with increase in production. Disadvantages for this type of economic system It may encourage the production of harmful goods.
it can fail to provide certain goods and services.
No provision of merit goods like education, health, housing etc...
Necessities are predetermined, such as healthcare.
The government can regulate supply, causing a High demand for products that create more money for the government.
Businesses may be encouraged to create monopolies, thus prices will increase limiting the choice of consumers. 2 Real World Events that use this type of economic system: Evaluate a problem in this economic system and what would be your solution.
State why? Evaluate a problem in this economic system and what would be your solution.
State why? The problem with a free market economy would be monopolies. With no regulations, one company can have a monopole and charge whatever they want Do you think this economic system promotes growth and innovation? Why? A solution would be that deregulation, this would help reduce the ability of a company to prevent it from starting a monopoly. A problem would be that there is no private property in the means of production, meaning that there will be no market and prices cant be established. A solution would be private ownership of production in order to allow more profit from the product. This will allow for a more competitive market or prices can be changed as needed. No because people would not be able to buy what they want or produce what they want. They would also be limited on how much they could buy or produce. Do you think this economic system promotes growth and innovation? Why? Yes and no because even though it may promote more production for products, it may also put the economy in a slump Compare and contrast Free market & Centrally planned economy Similarities Differences In a free market, individuals are free to choose where to buy
In a centrally planned economy people are told by the government what job they will work
In a free market, individuals are free to choose where they can buy products
In a centrally planned economy, you are told how much you will work for and how long you will work for and usually receive little income. Difference In a free market, individuals are free to choose where to buy
In a centrally planned economy people are told by the government what job they will work
In a free market, individuals are free to choose where they can buy products
In a centrally planned economy, you are told how much you will work for and how long you will work for and usually receive little income. Similarities 2 personal experiences Definition an economic system in which the government or worker councils manage the economy. Compare and contrast Centrally planned & Free market Advantages for this type of economic system You are guaranteed for a certain standard of life
You get free education
You get free healthcare
Get disability and Retirement benefits Disadvantages for this type of economic system No freedom of choice
System is too rigid when a change in production occurs
Government sets prices on goods and sets wages 2 Personal experiences 1. Class systems still exists despite differences
in political systems.
2. Manufacturers and suppliers still profit at the expense of the consumers despite regulation of manufacturing practices, and supply resources.
3. Greed is still the driving force behind production, supply and demand feed the greed.
4. Production of a product in both market systems is very seldom for the good of the consumer 1. Class systems still exists despite differences
in political systems.
2. Manufacturers and suppliers still profit at the expense of the consumers despite regulation of manufacturing practices, and supply resources.
3. Greed is still the driving force behind production, supply and demand feed the greed.
4. Production of a product in both market systems is very seldom for the good of the consumer Due to this type of economic system i can go to school for free while also receiving free healthcare.
My grandparents can get retirement funds as well as disability fund if something were to happen to them. When I was at the store i was able to purchase a product without being ripped of by an unreasonable price.
I was also able to buy The united kingdom is said to have a free economy in almost all its goods and services but retains bureaucratic socialized healthcare regime. Mexico has a free market economy because its economy is based on division of labor, and because of this the prices of goods and services are determined by supply and demand. 2 real world events Cuba's means of production are owned and is runned by the government and most of the labored force is employed by the state.
North Korea- the role of the market is sharply limited mainly in areas where peasents sell produce. http://www.bing.com/videos/search?q=Traditional+Economic+System&view=detail&mid=34AE848AB6206CCDD66B34AE848AB6206CCDD66B&first=0&FORM=NVPFVR Video
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