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CB 94574367 A 82 06808 A CB 94574367 A TWENT. Economic Systems.
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Economics: The production, distribution, and consumption of goods and services.
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Scarcity is the Root of Economics. There is not a single country in the world that has an abundance of all the resources that its people need/want. Scarcity = the limited supply of something Because of this, countries must make a plan of how to use these limited resources. This “plan” is called an….
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Three Questions. When developing the economic plan, each country must ask three basic economic questions: What goods/services will be produced? How will goods/services be produced? Who will consume the goods/services? The way a country answers these questions determines what kind of economic system it will have:.
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Command Economy: “We do what we’re told!”. AKA COMMUNISM.
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Command Answers. Let’s see how a command economy fits in with the 3 economic questions… What goods/services will be produced? Government decides what will be produced. 2. How will goods/services be produced? Government decides how to make them. 3. Who will consume the goods/services? Whoever the government decides to give them to..
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MARKET ECONOMY “We do whatever we think is best!”.
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Market Economy. Let’s see how a market economy fits in with the 3 economic questions… What goods/services will be produced? Businesses (owned by private citizens) based decisions on supply & demand and free enterprise. (AKA $!) 2. How will goods/services be produced? Businesses (owned by private citizens) 3. Who will consume the goods/services? Consumers.
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Mixed Economy: “ “We like to mix it up!”. - No system in the world is purely Command or Market A mix of command and market economies The government is involved in some aspects of the economy Examples today: France, India, Sweden, Venezuela.
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Mixed Economy. Let’s see how a Mixed economy fits in with the 3 economic questions… What goods/services will be produced? Businesses (owned by private citizens) based decisions on supply & demand and free enterprise. (AKA $!) BUT the government will pass laws to protect consumers 2. How will goods/services be produced? Businesses (owned by private citizens) BUT the government can provide assistance to Business if required 3. Who will consume the goods/services? Consumers BUT the Government may provide some services or protection.
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95137658_1404c284a8. Mixed Economy. No system in the world is purely Command or Market.
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Market Economy: “Capitalism”. Command Economy: “Communism”.