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Economic Systems

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Allison Straub

on 10 October 2012

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Transcript of Economic Systems

Types of Economic Systems Alli Straub Traditional Economy Command Economy Mixed Economy Market Economy A traditional economy is shaped by traditions. Things in this economy do not change much, and individuals do not enjoy much financial or occupational mobility.

An advantage of this economy is that things are "predictable"; everyone knows what they are supposed to do, who they trade with, and what to expect from others.

In many traditional economies, community interests take precedence over individual.

Traditional economic systems can be found in Australian aborigines and some isolated tribes in the Amazon. In a command economy (or planned economy), the government is in control. The government decides how to use and distribute resources. The government regulates prices and wages; it may even determine what sorts of work individuals do.

In command economies, the government has held different levels of control over the economy. In some countries, only major industries have been affected by government management. However, in others the government has held far more control over the economy.

Socialism is a type of command economic system. An example of a country that has a command economy is Cuba. In a market economy, economic decisions are made by individuals. The free interaction of individuals and companies in the marketplace determines how resources and goods are distributed.

Individuals choose how to invest their personal resources: what training to pursue, what jobs to take, what goods or services to produce. Individuals decide what to consume.

Some sources state that the United States has a market economy, while others state we have a mixed economy. Mixed economic systems combine elements of both the market and command economic systems. Many economic decisions are made in the market by individuals. However, the government still plays a role in the way resources and goods are distributed among people.

Many of the sources I found state that the United States is a mixed economy. Economic Systems An economic system is the way a society organizes the production and consumption of goods and services.

Every economic system must answer three basic economic questions:
1. What to produce?
2. How to produce?
3. For whom to produce?

How a society answers these three basic economic questions determines the society's economic system. Activity Time! In your groups you should have newspapers, along with many other supplies. Your group represents an economic system. Together, you will decide what good to produce with the given resources, how you will produce it, and who will receive the finished product.

You should make one example of the good you wish to produce. First discuss in your group what you will make out of the resources provided - adding no extra resources - and how you will produce it.

How will you decide who receives your finished product?
Tallest people, smartest people, most important people, best friends, the richest people, neediest people, etc.

Discuss in your groups how you will decide who should receive your finished products. Why should they receive them over other people in the country? Who will benefit from your decision and who will suffer?

By answering these three questions (what to produce, how to produce it, and who will it be produced for), each of your groups has created it's own economic system! :) Who Owns the Means to Production? An economy's means of production are its capital: factories, farms, shops, mines, and machinery. The means of production are used to produce other goods and services.

Based upon who owns the means to production there are three types of economic systems:
1. Communism
2. Socialism
3. Capitalism

No country has an economic system that is 100% communism, socialism, or capitalism. All countries today have mixed economic systems, with some free enterprise and some government ownership. Communism If the government owns and operates almost all of the nation's means of production, then that nation's economic system is called communism. Government planners decide the answers to the basic economic questions.

China has a communist economic system. Farming on private plots of land is sometimes allowed. In recent years, the Chinese government has been allowing more and more private businesses to operate.

There is public ownership of the means of production (government); the decisions by the government determine the economic activity. Socialism If the government owns and operates many of the nation's major industries-such as banks, airlines, railroads, and power plants-but allows individuals to own other businesses, including stores, farms, and factories, that nation's economic system is called socialism.

Sweden is an example of a country whose economic system is often described as socialist. Most of its major industries, such as coal mining, electric power, gas, telephone, and railroads, are owned by the government.

There is public and private ownership of the means of production; decisions by consumers, businesses, and the government determine the economic activity. Capitalism If almost all of the stores, factories, and farms in the nation are owned and operated by private individuals or businesses, then its economic system is called a free enterprise, or capitalism.

The U.S. has a capitalist economic system.

There is private ownership of the means of production; decisions by consumers and businesses determine the economic activity. Resources http://www.councilforeconed.org/lesson-resources/lessons/sample-lessons/Master_Curriculum_Guides_56_Sample_Lesson.pdf



http://www.socialstudieshelp.com/Economic_Systems.htm GA Performance Standards SS5E1. The student will use the basic economic concepts of trade, opportunity cost, specialization, voluntary exchange, productivity, and price incentives to illustrate historical events.
d. Explain how voluntary exchange helps both buyers and sellers (such as how specialization leads to the need to exchange to get wants and needs).

SS5E2. The student will describe the functions of four major sectors in the U. S. economy.
b. Describe the private business function in producing goods and services.
d. Describe the government function in taxation and providing certain goods and services.
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