Economic Systems

Report
Economic Systems
Name:__________
Date:___________
Mods:__________
What We Need to Know……


Benchmark A: Compare how different economic
systems answer the fundamental economic questions
of what goods and services to produce, how to
produce them, and who will consume them.
Indicator 3: Analyze the characteristics of traditional,
market, command, and mixed economies; in particular
how they address private property, freedom of
enterprise, competition and consumer choice, and the
role of government. These terms replace more
traditional terms of capitalism, communism, and
socialism used in Ohio’s previous graduation test.
I. How do different economic
systems meet their peoples’
economic needs?
A. People have unlimited wants.
 B. Nations have limited resources to meet
their citizens unlimited wants.
C. . A nation’s resources include: LAND,
LABOR, AND CAPITAL
 D. Scarcity: The inability of our existing
resources to meet our unlimited wants.

II. Three Fundamental
Economic Questions

A. Because every society has scarce
resources to meet unlimited wants, all
societies must seek answers to three basic
economic questions:
WHAT
should be
produced?
HOW
should it be
produced?
WHO
should get
what is
produced?
III. Economic Systems.
A. Economic System: The method that each
society uses to answer the three basic
economic questions.
 B. There are 4 main types of economic
systems.

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•
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•
1. Traditional
2. Command
3. Market
4. Mixed
III. Ec. Systems Cont.
Economic
Systems
Traditional
Market
Command
Mixed
IV. Market Economy
A. Market Economy: an economic system that
is controlled by privately owned businesses.
 B. Market Economies are also called capitalism
or free-market system.
 C. Capitalism operates under free enterprise:
individual businesses have the freedom to
decide what they will produce and sell to
consumers.

V. Adam Smith and A
Market Economy



A. Enlightenment philosophes applied the theory of
natural law to economics.
B. They believed in a Laissez-faire economy: the
government has little or no control over business.
C. Adam Smith: wrote The Wealth of Nations
(1776), which he supported a free-market economy
where supply and demand would determine prices
and other economic decisions.
V. Supply and Demand
A. Supply: the amount of a good that is
available.
 B. Demand: the desire of consumers to buy
that good.
 C. The theory of supply and demand states
that when supply goes up prices go down.
Conversely, When supply goes down and
demand goes up prices go up.

Supply and Demand
CHECK FOR
UNDERSTANDING:
1. What happens to
price when Demand is
high ex) Bread during
the French Revolution?
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2. What happens to
price when Demand is
High and Supply is low
ex) XBOX 720?
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___________________
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V. Command Economy


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A. Command Economy: A government decides the
answers to the three basic economic questions.
B. The government determines who should make
what and who should receive what is produced.
C. Command Economies are sometimes called
communism.
C. Command economies come at the cost of
individual freedom because there is no private
ownership of property and everything belongs to the
government.
VI. Karl Marx



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A. Karl Marx was born in Germany in 1818.
B. He was concerned with economic problems,
particularly how societies might produce and
distribute resources fairly.
C. Marx was against capitalism, in which he saw
private industries competing for profit with little or no
government regulation.
D. He felt that capitalist systems resulted in a class
struggle.
E. The inevitable result of this class struggle would
be a worker’s revolt.
VII. The Communist
Manifesto






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A. The Communist Manifesto: published in 1848, Marx
encouraged the workers of the world to rise up as a class and
defeat all wealthy capitalists.
B. He believed that one in power, workers would create a new
economic system called socialism.
C. Socialism: economic system in which resources would be
distributed equally by the government to create a classless
society.
D. Marx proposed that after living under the benefits of a socialist
economic system, people would learn to strive for equality rather
than for greed and profit.
E. Eventually, the need for government itself would fade away
because people would live by sharing their resources.
F. Marx envisioned this final goal of a workers’ revolution as
communism.
G. Communism: a system in which there was a classless society
without any government.
VIII. Traditional Economy


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A. Traditional Economy: Basic economic questions
are answered according to custom, religious beliefs
and tradition.
B. In a traditional economy, people follow the
occupations of their ancestors.
C. For example if your father was a farmer, you would
become a farmer.
D. Most people in traditional economies are farmers.
E. This type of economic system is typical in places
that have not yet industrialized.
F. In a traditional economy you only produce what you
need.
VIX. A Mixed Economy
A. Mixed Economy: a blend of two or more
economic systems.
 B. For example, the United States mainly has a
market economy however, the U.S.
government carries on many public enterprises
such as delivering the mail and regulating food
and drug distribution.

X. Mixed Economy
Quiz Study Guide
Economic
System
Traditional
Economy
Command
Economy
Market
Economy
What to Produce? How is it
produced?
Who gets what is
produced?

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