2.03 Understand the types of economic systems

How do socialist countries pay for the benefits that it gives its citizens?

To pay for these programs, the government charges higher taxes.

Which type of economic system answers the question the following way? --How will products be allocated? People in a traditional economy use some of what they produce and share the rest with their community. Everything that is produced by the community is consumed by thecommunity. There are no incomes, prices, or markets to consider in a traditional economic system.

Traditional economic system

Which type of economic system answers the question the following way? • What will be produced? People living in a traditional economy produce the same things thatwere produced by their ancestors. The items they produce are needed to carry on their daily lives.

Traditional economic system

Why is the United States' economy not a "pure" market economy?

Because our government produces some goods and services, such as roads, the postal service, education, and defense.

Why are these socialist countries called welfare states?

Because their governments have programs to provide citizens with free medical care, education,financial assistance, and other benefits.

What are economic market made up of?

Buyers Sellers

Classic examples of socialist economic systems are found where?

Canada Sweden Denmark

What are manufactured or constructed items used in production

Capital goods

Which type of economic system answers the question the following way? -How will products be produced? People in a traditional system use the same methods of production as their ancestors. They pass these methods down to their children. If a hunter learned to hunt using a bow and arrow, for instance, he will teach that method to his children.

Traditional economic system

What are the major types of economic systems?

Traditional economic system Command economic system Market economic system

In which system do they consume all that they produce in an attempt to satisfy their basic needs for food and shelter?

Traditional economy system

Name 3 countries with a market economic system.

United States Japan India

Many communist governments focus on the production of ___________ rather than ___________.

industrial goods, consumer goods.

In which economic system are citizens are free to live and to work where they choose, to use their incomes as they wish, to compete with others, and to own private property?

market economic system

What type of economy does the United States have?

market economy

What type of economy is it when individuals and businesses own and control most of the means of production and distribution?

market economy

Economic resources include__________________________?

natural resources human resources (including entrepreneurship)

Participants include _____,______, and ______.

producers consumers government

Prices are controlled by ______ and _______ rather than being set by the government in a market economic system.

supply and demand

The major problem for this type of economic system is that there is little opportunity for growth or improvement. Few new ideas are accepted, andnew technology is shunned because it is different. The people consume everything that they produce, so they are never able to save anything. Without any savings, they cannot invest in greater production. As a result, they are never able to raisetheir economic standards.

traditional economic system

This economic system is based on traditions passed down through the generations.

traditional economic system

Which economic system is sometimes called a subsistence system?

traditional economic system

Where might you find examples of traditional economies?

villages in the Andes Mountains Amazon Rainforest communities the Aborigines of Australia rural areas in Africa.

Socialist countries are often called what?

welfare states

The government does all of the economic planning is known as ?

Central planning

In which type of system is influence of consumers on economic decisions is limited, and there is little or no competition?

Command economic system

This system gets its name because a small group of people is in command of all the others.

Command economic system

What type of system is it when the government owns and controls practically all of the means of production and distribution?

Communism

What are the two primary types of command economic systems?

Communism Socialism

Which type of economic system answers the question the following way? How will products be allocated? Government decides how to distribute products because it also decides what jobs workers do and what incomes workers receive. Consumer goods are often in short supply becauseresources are used to support government efforts such as the military or industrialization.

Communist Command Economies

Which type of economic system answers the question the following way? How will products be produced? Since the government is the major producer in a communist system, the governmentdecides how to produce. Businesses are told what methods, workers, and factories to use.

Communist Command Economies

Which type of economic system answers the question the following way? What will be produced? Government owns the country's resources and decides how those resources will beallocated. The government determines what will be produced. It bases its production plans on what it wants rather than on consumer need.

Communist Command Economies

The problem with this type of economic system is that the government control their economies. When a government controls its economy, it controls its people as well.

Communist command economies

Who purchases products?

Consumers

Two of the best present-day examples of communist economies are?

Cuba North Korea

What is the organized way in which a country handles its economic decisions and solves its economic problems?

Economic System

What are the types of resources in an economic system?

Economic resources Capital goods

Who makes and enforces the country's laws?

Government

Name 3 European countries that have mix elements of socialist and market economies?

Great Britain Ireland France

Which type of economic system answers the question the following way? How will products be allocated? Income determines who gets what in a market economy. Each person's income level determines what s/he can purchase. Since income is based on the resources the consumer owns and supplies to the marketplace, people with highly valued resources have higher incomes with which to buy more or higher priced products.

Market Economies

Which type of economic system answers the question the following way? How will products be produced? Producers use production methods that enable them to offer products at prices which areattractive to consumers. Competition is an important factor. Each producer tries to use resources as efficiently as possible to compete with other producers and maximize profits.

Market Economies

Which type of economic system answers the question the following way? What will be produced? Consumers decide what will be produced by casting economic votes through their purchases. Price is the deciding factor. Producers strive to produce profitable goods and services that consumers want to buy.

Market Economies

In what economic system do individuals and businesses own the means of production and distribution?

Market economic system

Competition is a source of problems in which type of economic system?

Market economies

The problem with this type of economic system is even though people are free to go into business for themselves, they run the risk of financial loss. In addition, they may experience legal problems if they do not follow government regulations for their businesses.

Market economies

The problem with this type of economic system is that because incomes are based on unequal factors such as demand for a particular skill and the scarcity of that skill, some individuals' incomes are higher than others. Only those people with higher incomes can afford higher priced products.

Market economies

What are arrangements for the buying and selling of goods and services?

Markets

What is something of value that can be used to obtain goods and services called?

Medium of Exchange

What is the most common medium of exchange?

Money

Why Do We Need Economic Systems?

Our wants are unlimited, but our resources are not. People in all economic systems are interdependent.

Who makes or provides products?

Producers

What are the functions of an economic system?

Provide the framework for making decisions about what can be produced, how much can be made, and who can obtain the products.

What are certain elements found in all economic systems?

Resources Markets Participants Medium of exchange

What is a basic characteristic of a command economic system?

The government owns and operates many or all of the means of production and distribution.

Who controls allocation of resources in a market economy?

The market

In which system does the government own some basic means of production (think banks, energy, and communication), but there is private ownership of business as well.

Socialism

Which type of economic system answers the question the following way? How will products be allocated? Consumers' incomes determine what they can buy. People can choose what work they do, but wages are set according to the value of the work to society, as determined by thegovernment. As a result, government influences workers' incomes and their ability to purchase.

Socialist Command Economies

Which type of economic system answers the question the following way? What will be produced? Planning is done by the government, but supply and demand are taken into consideration.Planners decide whether to expand current production or save profits for future expansion.

Socialist Command Economies

Which type of economic system answers the question the following way? • How will products be produced? Government decides how certain basic products are produced. Other production decisions aremade by private businesses.

Socialist Command Economies

The problem with this type of economic system is that privately owned businesses cannot compete with state-owned businesses in a way that would be most beneficial to them. Instead, they must follow the state's master plan for the business orindustry. In some cases, this results in less efficient production.

Socialist command economies

The problem with this type of economic system is that to pay for their many human-services programs, governments levy high taxes. Becauseof these high taxes, individuals have less money to spend. Businesses charge higher prices, which can result in fewer sales.

Socialist command economies

The problem with this type of economic system is that while workers are free to choose their jobs, the government does encourage certain types of employment and discourage others. Workers are paid according to the value of their work in the eyes of thegovernment, rather than according to their ability and skill.

Socialist command economies

Two of the most famous communist systems in history were?

Soviet Union China

What is a level of existence that barely supports life?

Subsistence