Economic Systems
Objectives 1. To compare different types of economic systems 2. To identify characteristics of the private enterprise system 3. To explore the four types of economies the United States has experienced 2
What is an Economic System? • The way a society produces goods & services • The way a society provides and distributes goods & services to its citizens 3
Three Main Types of Economic Systems 4
Strong Command/Communism • Maintains strong governmental control • Requires all productive resources to be owned and operated by the government • Forbids competition • Permits little to no freedom in selecting a career and workplace • Practices heavy taxation • Occurs in North Korea, Cuba and People’s Republic of China 5
Strong Command/Communism • Advantages – allows for large changes to quickly be made – chooses jobs for everyone, including government provided medical and social services • Disadvantages – lacks in meeting consumer needs – prevents people from making their own economic decisions 6
Moderate Command/Socialism • Maintains medium governmental control • Practices governmental control in key industries, such as utilities and transportation • Allows private ownership in only non-vital industries 7
Moderate Command/Socialism • Allows competition in smaller, private sector • Permits the right to choose career and place of employment • Practices high taxation • Occurs in Sweden and France 8
Moderate Command/Socialism • Advantages – provides medical care, education and social security benefits – allows businesses and individuals to keep some profits for their efforts • Disadvantages – discourages small business ownership by heavy taxation and diminished income – controls important business sectors 9
Market/Capitalism • Derives from the principle of individual rights • Practices little governmental control • Encourages private ownership of business in all sectors • Supports competition in all areas • Allows full freedom to choose career and workplace • Practices moderate taxation • Occurs in the United States, Hong Kong and Germany 10
Market/Capitalism • Advantages – allows freedom to make economic decisions – practices low amount of governmental control • Disadvantages – means sometimes great personal and financial risks must be taken with little or no guarantee of even a minimal return 11
Traditional Economies • Occurs in less developed countries • Allows economic activities to be ruled by tradition • Ranks religious and cultural values as more important than economics • Determines jobs according to ancestors’ jobs 12
Traditional Economies • Advantages – raises everyone to know his or her station in life – provides a stagnant and unchanging economic life because of resistance to change • Disadvantages – stifles new ideas, technology and efficiency – differentiates the economic roles and status of men and women 13
Questions to Distinguish Economic Systems 1. What is the degree of governmental control? 2. What freedoms are the people allowed? 3. Is competition allowed? If so, to what degree? 14
Adam Smith, Karl Marx, John Maynard Keynes
Private Enterprise System • Is synonymous with the Market/Capitalist economy • Emphasizes private sector • Allows ownership of resources and businesses by individuals in society • Permits individuals, rather than government, to make economic decisions • Allows individuals to receive benefits and wages from employers 16
Private Enterprise System • Individuals have high levels of freedom to: – buy desired goods & services – produce & sell items – choose any career & workplace “People must have the freedom to buy, the freedom to sell, the freedom to try and the freedom to fail. ” Adam Smith Wealth of Nations 17
Private Enterprise System • Motivates businesses to succeed by: – promoting competition – meeting the wants & needs of customers – encouraging profits • Promotes entrepreneurship as an important aspect of an economy – an entrepreneur organizes, manages and assumes the risks of a business or enterprise 18
Private Enterprise System Characteristics of an Entrepreneur: 19
Four Basic Economies the U. S. has Experienced: 20
Agricultural Economy 21
Industrial Economy 22
Service Economy 23
Information Economy 24
Quiz 1. What are three main economic systems? 2. (T/F) Complete governmental control is a characteristic of moderate command/socialism. 3. What is another name for the private enterprise system? 4. What three freedoms do individuals have in a private enterprise system? 25
Quiz 5. List four characteristics of an entrepreneur. 6. Identify one feature for each of the four economies the United States has experienced. 26
Acknowledgements Krista Scott Production Coordinator Jennifer Donaldson Graphics Editor Geoff Scott Production Manager GW Davis Executive Producer ©MMIII, MMIV CEV Multimedia, Ltd. 27
Скачать презентацию Economic Systems Objectives 1 To compare different
8f464fa9b5f3f834ce1b4d1f709c6277.ppt