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An overview of major economic systems, including free markets and economic-political systems. It discusses the essential questions of describing similarities and differences between these systems and their societal impacts. four basic types of economic systems: traditional, command, market, and mixed, and three major economic-political systems: capitalism, socialism, and communism.
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Business Management
OBJECTIVE We will compare economic systems, free markets, and economic-political systems. ESSENTIAL QUESTIONS Describe the similarities and difference between major economic systems. Explain the societal impacts of each system.
Four Basic Types Economic System An organized way in which a state or nation allocates its resources and apportions goods and services in the national community Remember – economics involves making decisions about resources!
Types of Economic Systems
Traditional Economy You know what you’re supposed to do, who you trade with, and what to expect from others. Community interests take precedence over the individual. Some private property is respected. Describe the similarities & differences between major economic systems. Command Economy Also known as a planned economy Government controls economy & decides how to use and distribute resources Government regulates prices and wages Describe the similarities & differences between major economic systems.
Market Economy Based entirely on the interaction of buyers & sellers in the marketplace Individuals choose how to invest personal resources – what training to pursue, jobs to take, goods & services to produce Individuals decide what to consume based on wants & needs Describe the similarities & differences between major economic systems. Mixed Economy Combines elements of market & command economy Economic decisions made in the market Government plays a role in allocating & distributing resources (taxes) Describe the similarities & differences between major economic systems.
Mixed Economy Many economic decisions are made by individuals in the market. In general, market forces prevail. Government plays a role in the allocation and distribution of resources. Describe the similarities & differences between major economic systems. Types of Economic Systems
Capitalism Most means of production are privately owned & operated Production, distribution, and pricing decisions are market-driven Goal: profit Describe the three major economic-political systems. Capitalism Characterized by free competition and supply & demand Role of the government is to support the marketplace by: regulating some marketplace activity providing some social programs to support the people Describe the three major economic-political systems.
Societal Impacts How resources are allocated How much government regulates ownership, taxation, and allocation of goods & services How marketing decisions are made Explain the societal impacts of each system. Socialism Most means of production are state owned & operated Goal: social equality that narrows the gap between rich & poor Describe the three major economic-political systems.
Communism Community ownership of property Goal: economic equality Describe the three major economic-political systems. Communism Characterized by (almost) complete government ownership Private ownership encourages greed and competition. Role of government is to exercise control in the name of the people Describe the three major economic-political systems.
Societal Impacts How resources are allocated How much government regulates ownership, taxation, and allocation of goods & services How marketing decisions are made Explain the societal impacts of each system. Closing Task
