Download Economic Systems - Bibb County Public School District

Brain Jogger
• How do people get what they need
to live?
Give three bullet points:
•
•
•
Intro to Economics
• Economics- The study of how people get what
they want.
• Production- how things are made
• Distribution- how you get the items
• Consumption- using the items
• Natural Resources-gift of nature
SCARECITY
There is an unlimited amount of
need, but a limited amount of
resources.
Currency- Examples
• U.S.-Dollar
• Mexico-Peso
• European Union- Euro
Brain Jogger
1.
2.
3.
4.
5.
6.
7.
8.
Instructions: Get out a half sheet of paper and
number to 8. Match the definitions with the
correct definition.
G
Scarcity ___
A. using a product or service
H
Production ___
B. The study of how people get
B
Economics ___
what they want and need.
A
Consumption ___
C. Gifts of Nature
E
Distribution ___
D. A person who decides to buy or
C use a good or service.
Natural Resources ___
D
Consumer ___
E. Getting items to consumers
F
Currency ___
F. Money
G. Unlimited Needs, Limited
Please put how many they got right
over 8.
Ex: they miss 2 would look like 6/8
resources
H. Making a Product to sell or trade
Wrong
Answers
Grade
1
88
2
75
3
62
4
50
5
38
6
25
7
12
8
0
Economic Systems
1. WHAT TO PRODUCE? (What kinds of goods and
services should be produced?)
2. HOW TO PRODUCE? (What productive resources are
used to produce goods and services?)
3. FOR WHOM TO PRODUCE? (Who gets to have the
goods and services?
Three Types of Economic
Systems:
 1. Traditional Economy
 2. Command Economy
 3. Market Economy
 * Most countries are… Mixed Economies!
(Market + Command)
Market Economy
• Is an economy system
managed by the people.
• Based on supply and demand.
I love Doritos!!! And
so does everyone
else!!!
Doritos has increased
sales!!! Because
people can’t resist
them!!!
Doritos increases their
prices!!! Until.. People do
not buy as many Doritos
Market Economy
 Who decides what to produce?
 Businesses base decisions on supply and demand
and free enterprise (PRICE)
 Who decides how to produce goods
and services?
 Businesses decide how to produce goods
 Who are the goods and services
produced for?
 consumers
Market Economy
 There are no truly pure Market economies,
but the United States is close.
Think, Pair, Share
Market
• People get more choices
and they get to have a say.
• Govt. does not tell you
what to do.
• Govt. does not get to
protect the consumer.
• Greed can control business
decisions.
• Which would you rather live in? A Pure
Command or a Pure Market economy. Why?
4 minutes (two sentences)
Command Economy
• The government controls the
economy
• Government controls:
– What goods and services are
sold, produced.
– What jobs people can have.
Command Economy
 Who decides what to produce?
 Government makes all economic decisions
 Who decides how to produce goods
and services?
 Government decides how to make
goods/services
 Who are the goods and services
produced for?
 Whoever the government decides to give them
to
Command System
 Countries with communist governments have
Command economies
 Examples: There are no truly pure command
economic systems, but close countries are:
North Korea, former Soviet Union, Cuba
*Germany and Russia have moved away from
having a Command economy since 1991. Now they
have a Mixed economy.
Think, Pair, Share
Command
• Government inspected
product/service
• More people might
receive services
• People have jobs
• Govt. does not have
competition
• Product usually have poor
quality
• Not what the consumer
wants
Traditional Economy
• Economy based on traditions,
routines, and beliefs.
• The product is usually sold in a
market
Traditional Economy
 Who decides what to produce?
 People follow their customs and make what
their ancestors made (Look to the PAST)
 Who decides how to produce goods &
services?
 People grow & make things the same way that
their ancestors did (Look to the PAST)
 Who are the goods & services produced
for?
 People in the village who need them
Traditional Economy
 Examples:




Villages in Africa and South America
the Inuit tribes in Canada
the caste system in parts of rural India
the Aborigines in Australia
Think, Pair, Share
Traditional
• You know what you will do
the rest of your life
• You can Barter for
goods/services
• Products are of good
quality.
• You know what you will
do the rest of your life
• Limited resources/tech.
• Limited selection
Economic Systems
•
•
•
•
Market
Command
Traditional
….But No Country has a 100% Market,
Command, or Traditional Economy
• So……What do they have?
Economy Continuum
Mixed Economy
Pure
Command
Economy
Pure
Market
Economy
Mixed Economy
• It is a mixture of state and
private ownership and control.
• Every economy is mixed.
The post office is run by
the governement!
Farmers Markets are
run by the people.
Railways can be run
by the government.
Mixed Economy
 Who decides what to produce?
 Businesses AND the government decide what to
produce
 Who decides how to produce goods &
services?
 Businesses AND the government
 Who are the goods & services produced
for?
 Consumers
1.
2.
3.
4.
Traditional
Command
Market
Mixed
A. Controlled by the Govt.
B. Controlled by the past.
C. Mixture of private and govt. control.
D. Controlled by the people
Economy Continuum
Command
North
Korea
1%
Market
Russia
50.5%
Cuba
27.7%
Germany
71.8% U.S.
77.8%
U.K.
74.5%
Australia
U.S.
Germany
Russia
North
Korea
Australia
82.5%
Cuba
U.K.
Guess that Economy
• I will give you an example of a country’s
economy.
• You need to tell me what type of economic
system they have.
Example # 1
• If my father and mother make
baskets in a small village in
Yemen and they are training me
to take over their business when
they die, what type of economic
system is being described?
Example # 2
• McDonalds comes out with a new type fries
made out of asparagus. After a couple
months, McDonalds sees that none of their
customers are buying the new fries, so they
stop selling them. This is an example of
________.
Example # 3
The government of Saudi Arabia tells it citizens
that they can only buy their government made
tires, and no other country's or company's
tires. This is an example of ________.
Example #4
• The USA, for the most part, lets people make
the economic decisions in the country, but the
government does step in to make sure that
citizens are not taken advantage of by other
people or companies. This is an example of
________.
Activity
•
Take the assigned economy and answer the following questions and
charts:
Questions
What type of economy do
you have?
What is your country’s
name?
Where is your country
located?
What type of businesses do
you have?
Who makes most of the
important economic
decisions in your country?
Complications with your
economy:
Answers
Impacts
• Why is a Mixed Economy not
considered an economic system like
command, market, and traditional
economies?
• Two sentences please.
GDP
• GDP or Gross Domestic Product is the sum of
goods and services produced in an economy
during a period of time (usually a year).
GDP
• The Gross Domestic Product measures the
value of economic activity within a country.
Investment in Human Capital
• (education and training)
• By investing in human capital, you increase
production, improve company, increase GDP.
Investment in capital
•(factories, machinery, and technology)
•By investing in capital, you increase
production, improve company, increase
GDP.
Entrepreneur
One who innovates and takes risks in
developing a product or business.
Natural Resources Affect Growth
• If a country has a lot of
resources, great! It will help
their economy.
• But they must also invest in
other things too!!!
• Climate also affects growth.
(Drought does not help
things)
• Nigeria has a lot of oil, but
did not invest in farming.
Hard for companies to Invest in Africa
• Why?
– Unstable governments and corruption.
– Weak work force
• 13% of South Africans are HIV positive (AIDS)
– Poor work conditions
You’re not
getting my
money!!