Presentation top top theme: " An economic system is a an approach used by a society to produce and distribute goods and services."— Presentation transcript:
You are watching: The method used by society to produce and distribute goods and services
2 An economic system is a technique used by a society to produce and distribute goods and also services.
4 Three financial Questions: 1 What goods and services have to be produced? **Each society must decision what to produce in order to accomplish its needs and also wants.
5 2. How should these goods and also services be produced? **How to use a society"s resources (combine land, labor and also capital) to create goods and services. have to a culture produce electricity with oil, solar power or nuclear power?
6 3. For whom should these goods and services be produced? **How perform we divide the goods and also services? that gets to drive a Bentley and who it s okay a subway pass? This is established by exactly how societies distribute income. Three economic Questions
7 economic Systems. Which system a society uses to distribution income, goods and services depends on the society’s goals and also values. A society’s values, together as flexibility or tradition, overview the form of economic system that culture will have.
8 1. Financial Efficiency Maximizing what friend can obtain for sources 2. Financial Freedom The possibility to do our own options 3. Financial Security/Prosperity Assuring human being that goods and also services will certainly be there when they require them Society"s Goals and also Values
9 4. Financial Equity culture must decision the best way to division up the economic pie 5. Economic Growth/Innovation An economy must flourish for a country to improve its traditional of life 6. Other: (depending on the economy) Universal wellness care and also environmental defense
10 economic Systems 1. Classic Economy 2. Market economic situation 3. Command (Centrally Planned) economy 4. Mixed economic climate
11 1. Timeless Economy The oldest and also simplest financial system. Depend on habit, custom, or ritual: revolve roughly the family. Members of this societies occupational to support the entire Community. Frequently lack modern conveniences and have a reasonably low standard of living. Traditional economies room successful if they accomplish their very own needs.
12 traditional Economy con"t 1. What come produce? world follow their customs and make what their ancestors made. 2. Exactly how to produce goods & services? people grow & make things the same means that their ancestors did. 3. Because that Whom to produce? civilization in the village who need them.
13 Examples: villages in Africa and South America Inuit people in Canada Caste system in components of rural India Aborigines in Australia Advantages: Not lot room for readjust Usually small close, neighborhoods Work because that the common good not individuals Disadvantages: unable to deal with natural disasters Resistant to adjust Low standard of life
14 timeless Economy con"t 1. That decides what come produce? world follow your customs and make what your ancestors made. 2. Who decides exactly how to create goods & services? human being grow & make points the same means that your ancestors did. 3. Who room the goods & services created for? civilization in the town who need them.
15 2. Market economy An economic system in i beg your pardon production and also distribution concerns are answer by prices and profits (supply and demand) many of the sources are own by private citizens economic decisions based on totally free Enterprise (competition in between companies) Laissez-Faire: NO government interference at every !! No laws to protect workers form unfair bosses Pure Capitalism.
16 self-interest: personal gain is the motivating force in the totally free market competition: regulating force INVISIBLE HAND (Adam Smith) incentives (negative and also positive): A hope of reward or fear of punishment that encourages a human to act a certain method (lower prices)
17 advantages Competition leads to boosted efficiency, together firms do what is crucial to lower their expenses Most civilization work harder over there is much more innovation together firms look for new products to sell and cheaper ways to execute their work Examples: There space NO important pure industry economies, however Hong Kong, Singapore, the joined States and also Australia space close. Flaw Priority is earning the biggest profit and not the peoples demands (so health, education, etc..receive tiny attention) Worsening exploitation the workers growing social and economic inequality
19 Command—or —Centrally planned economic climates operate in direct opposition to free market economies. 3. Command/Planned economic situation
20 The federal government owns land and also capital, and controls labor (government decides where people work, exactly how much they acquire paid) forces that drive free market, like SELF-INTEREST and also COMPETITION, space absent. Consumers don’t make decisions. Command/Planned economic climate
21 Advantages: readjust production direction significantly in a short time. (consumer goods to armed forces goods) without input from individuals. Plenty of health and also public services are obtainable to everyone at little/not cost, regardless of revenue (quality different by country) Disadvantages: no designed to fulfill the wants of consumers. No incentive to work hard because ALL employees receive similar wages requires a huge decision making administration (gov"t) go not have the adaptability to attend to minor, day-to-day problems.
23 SOCIALISM SOCIALISM- social/political approach that argues wealth need to be spread evenly transparent a culture by democratic means Socialism exists in varying degrees throughout the people Socialists argue that real equality have the right to only exist if financial equality exist Public circulation of riches is crucial (Socialist societies have the right to be democracies..Canada) federal government controls major industries (utilities, etc.)
24 communism Communism: a social, political, and also economic belief in i m sorry ALL method of manufacturing are own in common. Communist govt"s arose from socialism and also have historically to be authoritarian and also run by solitary parties or dictators Centrally planned economic climate (all economic/political strength in hands of the gov’t) Examples: north Korea, Cuba, Iran, former Soviet Union.
25 4. MIXED economy Mixed Economy: An economic system the features characteristics of both capitalism and socialism. A mixed financial system allows a level of private financial freedom but also enables for govt"s to interfere in economic tasks in bespeak to achieve social aims. Most contemporary economies mix both market and centrally to plan systems.
26 MIXED economic situations Balancing Control and Freedom society must assess values and also prioritize financial goals part goals may be far better met by the open market? part goals need to have federal government action? Each nation must decision what to provide up in stimulate to fulfill its objectives
29 The joined States economy federal government intervention because that order, crucial services and to promote the general welfare In the political continuum of conservatives vs. Free Conservatives generally want less government intervention in the industry place Liberals generally want the basic welfare of the human being protected
31 1. Household: A human being or team of civilization living in the same residence. 2. Firm: An company that provides resources to produce a product i m sorry it then sells. 3. Profit: The financial gain made in a transaction
32 4. Factor Market: industry in i m sorry firms acquisition the components of production from households. 5.
See more: What Does Harp Stand For Dable Refinance Program (Harp), Home Affordable Refinance Program (Harp)
Product Market: The market in which families purchase the goods and services the firms produce.
33 federal government in the variable Market favor businesses federal government purchases land, labor and capital from families in the aspect market bureaucracy and military (2.8 million employees, 9.7 billion in wages)
34 transporting Money government collects revenue (taxes) native both households and also businesses revenue ($) is then transferred to a selection of services and also products every one of which need government employees to oversee ▪ Military, Food and Drug Administration, FDA needed? ▪ biggest is social security? / $800 billion these days?
35 The joined States economic climate USA does have actually relatively couple of banking regulation (until now) and also foreign financial institutions do have some limitations international investment in the USA is encouraged—where perform you think the $800 billion came from come bail united state out?????