1. Economic Systems and the Role of Government
Objective: Compare and contrast economic systems
EXIT ticket: Identify 3 types of economic systems & give a criteria of that system.

2. The Economic Questions
A nation must answer the three economic questions when deciding how to use its limited resources.
What goods and services should be produced?
How should the goods and services be produced?
For whom should the goods and service be produced?
The way they answer them defines the nations economic system
Objective: Compare and contrast economic systems

3. Objective: Compare and contrast economic systems
Broad Categories
Economists have classified economic systems into three broad categories
Traditional Economies
Market Economies
Command Economies
Objective: Compare and contrast economic systems

4. Traditional Economies
Traditions and rituals answer the what, how and for whom
Answers are often based on religious or cultural practices and ideals
What: little choice as to what to produce
How: bound to tradition, they continue what their families have done for generations
For whom: tradition regulates who will sell and to whom
Objective: Compare and contrast economic systems

5. Objective: Compare and contrast economic systems
Market Economies
There is NO government involvement
Individuals own the means of production
Businesses compete for customers
What: Consumers decide what will be produced by the purchases they make – poor products will not be purchased
How: Companies must find the most efficient means of production to increase profits
For whom: the people with the money – this motivates people to work and make money
Objective: Compare and contrast economic systems

6. Objective: Compare and contrast economic systems
Command Economies
The government makes economic decisions and decides what, when, and how much will be produced and distributed
What : one person (usually a dictator) decides what will be produced
How: government decided who will produce it and how
For Whom: government decides who will get what products
In principle, wealth is shared equally among all to ensure everyone’s basic needs are met
Objective: Compare and contrast economic systems

7. Objective: Compare and contrast economic systems
Mixed Economies
No economy is purely ONE economic system
The USA is a mixed economy, leaning toward a market economy
In a pure market economy there is NO government involvement at all
The US government has some involvement, but is strictly managed by laws and regulations
Objective: Compare and contrast economic systems

8. Objective: Compare and contrast economic systems
Capitalism
Characterized as encouraging :
Marketplace competition
Private ownership of businesses
Government cares about its people and tries to take care of those that can not care for themselves
Although the number of social services does not match that of a socialist economy
Examples: USA, India
Objective: Compare and contrast economic systems

9. Objective: Compare and contrast economic systems
Communism
Characterized by:
Total government control (they decide who will work where, how much they are paid, etc.)
People are paid even if they don’t work
Theoretically this ensures everyone will have their basic needs met
There is nothing to drive people to better themselves or to work hard
Examples: Cuba, North Korea
Objective: Compare and contrast economic systems

10. Objective: Compare and contrast economic systems
Socialism
Similar to capitalism, only there is much more government involvement in the economy
More social services to ensure a good standard of living
Taxes are much higher to help finance government services
Government runs key industries (telecommunications, natural resources, transportation and banking)
Examples: Canada and Sweden
Objective: Compare and contrast economic systems