Introduction to economics

ECONOMIC SYSTEMS Spring Semester 2019 Stater Always remember Economics is the study of choices related to resources, production, and consumption 4 Types of Economic Systems Command

Market Traditional Closed #1 Command Economies Characteristics: Centrally operated by government, which: Prohibits personal property Decides what is made Controls prices and supplies

Major Goal: Create social equality #2 Market Economies Characteristics: Pure Market Economy: No govt intervention Mixed Market Economy: Combo of command & pure market

Some govt intervention Producers & consumers can make economic decisions Major Goal: Promote free economic choices #3 Traditional Economies Characteristics: Based on

traditions/customs of family/community Center on barter/trade (not $) Hunting, gathering, farming Major Goal: Preserve traditional customs #4 Closed Economies

Characteristics: Restrict trade with international partners Isolation from rest of the world Major Goal: Maintain selfsufficiency

QUICK QUIZ The most common economic system in the world is a a.closed economy. b.command economy. c.mixed market economy. d.traditional economy. QUICK QUIZ What is one example of a closed economy? a.a barter system that does not rely on money or other currency b.a restricted system that blocks trade with

international partners c.a trade-based system that encourages the flow of goods and services d.an old-fashioned system that preserves traditional choices and customs QUICK QUIZ The goal of a command economy is to a.sustain self-sufficiency. b.preserve traditional customs. c.create equality within a society. d.promote free economic choices.

Governments & Economic Systems The more involved a govt is in the economy, the more restrictive that economy will be Command Economies: Socialism Govt can control factories/means of

production Citizens may often own homes, but not businesses Ex: Norway, Cuba (was Communist, is reforming) Command Economies: Communism Focus on promoting social/economic

equality The state: Owns property Employs workers Ex: North Korea Mixed Market Economies: Republics Provide many freedoms Elect representatives Citizens can:

Change jobs Own businesses People provide their own necessities Comparing Command & Mixed Market Economies Command Pros Cons

Mixed Market Pros Cons Govt may provide Tough to start a necessities for business citizens Independence & choice

Citizens pay for necessities Smaller income gap Greater opportunity to gain wealth Larger income gap

Tough to become rich High taxes Employment not guaranteed QUICK QUIZ A mixed market economy tends to exist under a a. communist government that provides little regulation. b. democratic government that provides some

regulation. c. representative government that provides no regulation. d. socialist government that provides a lot of regulation. QUICK QUIZ In a communist command economy, workers are employed by a.the agencies. b.the consumers. c.the producers. d.the state.