Economic SystemsEconomic Systems

88thth Grade U.S. History Grade U.S. History

Mr. EmbryMr. Embry

Chart ActivityChart Activity• Complete the Complete the Major Economic SystemsMajor Economic Systems

chart handout as we progress through the chart handout as we progress through the notes.notes.

Three Basic Questions???Three Basic Questions???

• Every society must answer three basic Every society must answer three basic question. Who or What Determines:question. Who or What Determines:

1. What gets produced?1. What gets produced?

2. How things get produced?2. How things get produced?

3. For whom to produce for?3. For whom to produce for?

Different Types of EconomiesDifferent Types of Economies• We have three different types of economic We have three different types of economic

systems.systems.

1. Market 2. traditional 3. Command1. Market 2. traditional 3. Command

What is a Market What is a Market Economy?Economy?

• Definition- economic system in which the Definition- economic system in which the prices of goods and services are prices of goods and services are determined by supply and demand.determined by supply and demand.

• This can also be referred to as a This can also be referred to as a Free Free Market EconomyMarket Economy. .

• Examples: United States, Examples: United States,

Japan, France, and England.Japan, France, and England.

Market Economies Three Market Economies Three Basic QuestionsBasic Questions

• The The producers and consumers in a producers and consumers in a market placemarket place are responsible for deciding are responsible for deciding what gets produced, how things are what gets produced, how things are produced, and for whom they are produced, and for whom they are produced for.produced for.

Advantages of Market Advantages of Market EconomiesEconomies

1. Can adjust to change easily.1. Can adjust to change easily.2. Provides a variety of goods 2. Provides a variety of goods and services.and services.3. People have the ability to make 3. People have the ability to make as much money as they can and as much money as they can and do whatdo what’’s in their best interest.s in their best interest.4. For the most part, businesses can4. For the most part, businesses can produce what they want, when theyproduce what they want, when they want.want.

Disadvantages of Market Disadvantages of Market EconomiesEconomies

1.1. DoesnDoesn’’t always provide the basic needs to t always provide the basic needs to everyone in society (sometimes the weak, sick, everyone in society (sometimes the weak, sick, disabled, or elderly have trouble providing for disabled, or elderly have trouble providing for themselves).themselves).

2.2. Does not guarantee security or financial Does not guarantee security or financial success.success.

3.3. Occasional market failures (which can lead to Occasional market failures (which can lead to some companies having to much power and some companies having to much power and becoming a monopoly, charging outrageous becoming a monopoly, charging outrageous prices). prices).

What is a Traditional What is a Traditional Economy?Economy?

• Definition- economic system in which Definition- economic system in which resources are given by inheritance. resources are given by inheritance.

• This economy has a strong social network This economy has a strong social network based on older methods and tools.based on older methods and tools.

• Examples: Ethiopia, Somalia, Examples: Ethiopia, Somalia,

New GuineaNew Guinea

Traditional Economies Traditional Economies Three Basic QuestionsThree Basic Questions

• In this type of economy, the three basic In this type of economy, the three basic questions are settled by questions are settled by traditions, traditions, customs, and beliefscustoms, and beliefs. .

• This is the basis for deciding This is the basis for deciding

what gets produced, how things what gets produced, how things

are produced, and for whom they are produced, and for whom they

are produced for.are produced for.

Advantages of Advantages of Traditional EconomiesTraditional Economies

1.1. People have individual roles People have individual roles

that are clearly defined.that are clearly defined.

2. Best of the past is retained 2. Best of the past is retained

and continued.and continued.

3. Older ways have proved to 3. Older ways have proved to

be effective for survival.be effective for survival.

Disadvantages of Disadvantages of Traditional EconomiesTraditional Economies

1.1. These types of societies are These types of societies are

slow to change.slow to change.

2. New technology is discouraged, making it 2. New technology is discouraged, making it harder to improve.harder to improve.

What is a Command What is a Command Economy?Economy?

• Definition- an economy in which the Definition- an economy in which the government manages the economy.government manages the economy.

• Examples: Cuba, North Korea, Bulgaria, Examples: Cuba, North Korea, Bulgaria, ChinaChina

Command Economies Command Economies Three Basic QuestionsThree Basic Questions

• In a command economy, the three basic In a command economy, the three basic questions are settled by questions are settled by economic economic planners from the central government.planners from the central government.

Advantages of Advantages of Command EconomiesCommand Economies

1.1. Guarantees equal standard of Guarantees equal standard of

living for everyone.living for everyone.

2. Needs are provided through 2. Needs are provided through

the government (health care, education the government (health care, education hunger).hunger).

3. Less crime and poverty.3. Less crime and poverty.

4. No sudden economic depressions.4. No sudden economic depressions.

Disadvantages of Disadvantages of Command EconomiesCommand Economies

1.1. Minimal choices for the people (careers Minimal choices for the people (careers and goods).and goods).

2.2. No incentive to do better quality No incentive to do better quality

of work.of work.

Quiz TimeQuiz Time

Major Economics Major Economics Systems QuizSystems Quiz

Write either T or F I the blanks below. If you Write either T or F I the blanks below. If you answered F, tell why.answered F, tell why.

___1. List the three major economic systems.___1. List the three major economic systems. ___2. Which type of economy has its three basic ___2. Which type of economy has its three basic

questions settled by economic planners from the questions settled by economic planners from the central government?central government?

___3. Which type of economy has resources that ___3. Which type of economy has resources that are given are given from inheritance?are given are given from inheritance?

___4. List two advantages of a market economy.___4. List two advantages of a market economy. ___5. What are the three basic questions that ___5. What are the three basic questions that

every society must answer?every society must answer?

Quiz TimeQuiz Time

___6. Which economy is also referred to as a Free ___6. Which economy is also referred to as a Free Market Economy?Market Economy?

___7. Ethiopia, Somalia, and New Guinea are all ___7. Ethiopia, Somalia, and New Guinea are all examples of what type of economic system?examples of what type of economic system?

___8. Which type of economy has its three basic ___8. Which type of economy has its three basic questions settled by producers and consumers in questions settled by producers and consumers in a market place?a market place?

___9. Give two examples of where we can find a ___9. Give two examples of where we can find a command economy?command economy?

Quiz TimeQuiz Time

___10. List one advantage of a traditional ___10. List one advantage of a traditional economy.economy.

Final Answer?Final Answer?

How well did you do?How well did you do?