Understanding Economic Systems and Their Impacts on Societies

 
Essential Questions
:
1.
How do different societies around the world
meet their economic needs?
2.
What are the advantages and disadvantages of
each economic system?
 
1
 
 
Economics
 
  The study of how people meet
their basic needs.
P
r
o
b
l
e
m
 
o
f
 
S
c
a
r
c
i
t
y
:
 
 
u
n
l
i
m
i
t
e
d
w
a
n
t
s
 
w
i
t
h
 
l
i
m
i
t
e
d
 
r
e
s
o
u
r
c
e
s
Example:  Gasoline/Oil
 
 
 
2
 
Economics cont’d
 
Societies must answer 
3 questions
What
What
 to produce
How
How
 
to produce
For whom 
For whom 
to produce
How these questions are answered determines its
economic system.
Traditional Economy (Amish)
Free Enterprise 
(
Market
)
Communist Economy 
(
Command
)
Socialist Economy (Mixed)
 
 
 
3
 
Traditional
 economy
 
People meet 
their basic needs 
much
as their ancestors did.
Economic decisions are made on the
basis of customs 
and 
beliefs handed
down
 from one generation to
another.
 
 
4
 
Traditional
  
economy cont’d
 
Production Methods
Subsistence Agriculture
:  Farmers grow
just enough to feed themselves and their
families.
Cottage Industries
:  Goods like textiles
are produced in private homes by hand,
usually by the entire family.
 
5
 
Free Enterprise 
economy
 
People freely produce and buy what they
want.
3 questions are answered by the interplay
between consumers and producers.
Prices
 are set by the interaction of
supply/demand.
 
6
 
Free Enterprise 
economy cont’d
 
Producers invest their money in order to
make a 
profit
.
There is 
little government interference
.
Inefficient producers are eliminated by
going out of business.
Also called a 
market
 economy.
Examples:  United States, Japan, Hong Kong,
China
 (communist political system) working
on creating Free Enterprise economy
 
7
 
Communist 
economy
 
Government sets economic goals to be
met.
Workers labor together and are supposed
to share equally in the fruits of their
labor.
Private property ownership is 
abolished
.
The government owns/operates all
businesses
 
8
 
Communist
 
economy cont’d
 
Developed by Karl Marx in the 1800s.
Also called a 
command
 economy.
Examples:
Former Soviet Union (1917-1991)
Cuba
North Korea
 
 
9
 
     
SOCIALIST
   economy
 
Government owns 
some
 basic
industries.
Private ownership of smaller
businesses is allowed.
Government 
provides 
low-cost or free
public services:  schools, health care,
etc.
 
10
 
SOCIALIST
 
economy cont’d
 
Also called a 
mixed
 
economy.
Examples:
Sweden and Israel.
India- Socialist 1947-1991,working
towards 
free enterprise
Western European countries:
            France, Germany, UK
 
11
 
 
 
12
               Review
 
In Indonesia, the government owns large
industries and sets some prices.  However,
private businesses are also encouraged and
several hundred are actively traded on the
Indonesian Stock Exchange.  This country’s
economy system can be best be classified as-
A.
Traditional
B.
Free Enterprise
C.
Socialist
D.
Communist
                                           ANSWER:  
C
13
Review
 cont’d
 
In which economic system would you
expect the widest selection of consumer
goods?
A.
Traditional
B.
Free Enterprise
C.
Socialist
D.
Communist
                              ANSWER:  
B
14
Review
 cont’d
 
An essential characteristic of a
communist economy is the-
A.
Interaction of supply and demand
B.
Organization of worker unions
C.
Privatization of business
D.
Government ownership of property
                              ANSWER:  
D
15
 
 
stop
 
16
 
review
 
17
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Explore how different societies meet their economic needs through traditional, free enterprise, and communist economic systems. Learn about the advantages and disadvantages of each system, from the customs-based decisions in traditional economies to the government-controlled operations in communist economies.


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  1. Essential Questions: 1. How do different societies around the world meet their economic needs? 2. What are the advantages and disadvantages of each economic system? 1

  2. Economics The study of how people meet their basic needs. Problem of Scarcity Problem of Scarcity: unlimited wants with limited resources Example: Gasoline/Oil 2

  3. Economics contd Societies must answer 3 questions What to produce How to produce For whom to produce How these questions are answered determines its economic system. Traditional Economy (Amish) Traditional Economy (Amish) Free Enterprise Free Enterprise (Market Communist Economy Communist Economy (Command Socialist Economy (Mixed) Socialist Economy (Mixed) Market) Command) 3

  4. Traditional economy People meet their basic needs much as their ancestors did. Economic decisions are made on the basis of customs and beliefs handed down from one generation to another. 4

  5. Traditional economy contd Production Methods Subsistence Agriculture: Farmers grow just enough to feed themselves and their families. Cottage Industries: Goods like textiles are produced in private homes by hand, usually by the entire family. 5

  6. Free Enterprise economy People freely produce and buy what they want. 3 questions are answered by the interplay between consumers and producers. Prices are set by the interaction of supply/demand. 6

  7. Free Enterprise economy contd Producers invest their money in order to make a profit. There is little government interference. Inefficient producers are eliminated by going out of business. Also called a market economy. Examples: United States, Japan, Hong Kong, China (communist political system) working on creating Free Enterprise economy 7

  8. Communist Communist economy economy Government sets economic goals to be met. Workers labor together and are supposed to share equally in the fruits of their labor. Private property ownership is abolished. The government owns/operates all businesses 8

  9. Communisteconomy contd Developed by Karl Marx in the 1800s. Also called a command economy. Examples: Former Soviet Union (1917-1991) Cuba North Korea 9

  10. SOCIALIST SOCIALIST economy Government owns some basic industries. Private ownership of smaller businesses is allowed. Government provides low-cost or free public services: schools, health care, etc. economy 10

  11. SOCIALISTeconomy contd Also called a mixed economy. Examples: Sweden and Israel. India- Socialist 1947-1991,working towards free enterprise Western European countries: France, Germany, UK 11

  12. 12

  13. Review In Indonesia, the government owns large industries and sets some prices. However, private businesses are also encouraged and several hundred are actively traded on the Indonesian Stock Exchange. This country s economy system can be best be classified as- A. Traditional B. Free Enterprise C. Socialist D. Communist ANSWER: C 13

  14. Reviewcontd In which economic system would you expect the widest selection of consumer goods? A. Traditional B. Free Enterprise C. Socialist D. Communist ANSWER: B 14

  15. Reviewcontd An essential characteristic of a communist economy is the- A. Interaction of supply and demand B. Organization of worker unions C. Privatization of business D. Government ownership of property ANSWER: D 15

  16. stop 16

  17. review 17

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