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Name: _____________________Economic SystemsLO:1) _________________________________________________________________________________________________________________________________________________________________________________2) _________________________________________________________________________________________________________________________________________________________________________________Economic system – method used by society to allocate/_____________________________ the scarce resources, in order to ________________________________________________________________________4 Economic SystemsREFRESHER: What are the 3 Economic Questions?Economic GoalsEconomic GoalsSummaryExampleEconomic FreedomFreedom to _____________________________ make choices with little interference by the __________________________Economic EfficiencyMaking the most of ____________________________, using your resources _______________ and ___________________Economic Security Government will provide a __________________________ in times of economic downturnsEconomic SustainabilityKnowing that goods and services will __________________________________________Economic Equity_________________________ for ___________________________; being paid according to your __________________________Economic Growth Improving the __________________________________ from year to year, improving peoples’________________________Economic InnovationImproving upon _________________________________________ in order to improve ______________________________________Full Employment___________employment levels.Price StabilityNormal _____________________ (price increases)Review Economic GoalsSituationEconomic GoalLast week I willingly enrolled in college courses. I am so happy that I make my decisions about my future.My uncle lost his job, but thankfully he is able to receive unemployment checks.Wal-Mart recently upgraded all of their registers to touch screen monitors.General Motors replaced all of their human workers with robots in order to increase productivity.As a result of the internet and technology, our economy has experienced significant expansion over the past 30 years.I can always expect Publix to have the food I like!Hopefully in the future we will have full employment.With every degree/skill I earn, I improve my ability to make moneyTraditional EconomyNotes from Video:1. What to produce:2. How to produce it:3. For whom to produce:Examples:Advantages:Disadvantages:Command EconomiesCommand – ____________________________________________________________ the Factors of ProductionCentrally Planned Economy – central government answers the ______________________________________________; ________________ to produce, ________________to produce, and ________________to produceOppose _________________________, free market pricing, economic ___________________Socialism Socialism – government owns __________________________________________ ______________________ established under democratic political processGovernment owns basic industries __________________________________________________________Central planner makes ____________________________________________________________________ Central planners might control _____________________________________________________________COMMAND ECONOMY: CommunismGOAL = accumulate wealth & goods for ruling class & ___________________________________________________Determines businesses to operate, _______________________________________________Determines who is _____________________________________________________________Individual consumer not ________________________No pure command economies ___________________Communism Karl Marx – German ___________________________________________ that studied ______________________________________ in EuropeCommunist Manifesto – written by Marx and __________________________________________ became basis for modern-day __________________________________________Thought capitalism would fail because it __________________________________________________________Believed in a ___________________________system, where all share in _____________________________________Communism – political and economic system with ____________________________________________Authoritarian Government – exact _________________________________________from their citizenEXAMPLE: KOREACommunist North Korea_______________________________________________________Built large army: _______________________In 1900s and early 2000s, ____________________________________In 1990s, _______________________________________Since 2003, _____________________________Demise of Command Systems = Two insurmountable problems:1) The Coordination problem: ____________________________________________________________2) The Incentive problemThere is little or no _______________________________No reward for doing well, no punishment for ____________________Advantages1)2)3)Disadvantages1)2)3) The Free MarketImagine that you are walking into Walmart. List 3 items that you could purchase and the departments that you would find them in.ItemDepartmentMarket –______________________ and ________________________ meet to exchange ______________________ and ________________________ Market Economy – economic decisions are made by ______________________ and ________________________ based on buying and selling of goods and servicesAll resources are _______________________________________Any income derived from selling resources goes exclusively to ownerThe government has a very ___________________________ Fundamentals of market economyAdam Smith = _____________________Limited government _____________Laissez Faire = ___________________Capitalism = _______________________________Market not _______________________4734919288760Voluntary Exchange - is the act of buyers and sellers ______________________ and _______________________ engaging in market transactions where both parties ___________________________Example:When I buy gasoline, I get energy for my car, the firm gets my moneyProduct PurchasedWhat did you pay for it (trade)?How did you end up better off?-1351736465900SpecializationSpecialization – the separation of _________________________________________________; people focus on a ______________________________________________________Division of Labor – workers perform _________________________________ in order to operate ____________________________________________Productivity (efficiency) – average amount of _______________________(good or service) per unit of _______________________ (labor, machine, etc.)Increased _______________________means to do ________________________________________________________________investments allow increased efficiencyExample: Mary looks over reports on four of her workers. Jack made 25 baskets in 5 hours. Walter made 36 baskets in 6 hours. Rudy made 40 baskets in 10 hours. Sam made 22 baskets in 4 hours. Jim made 50 baskets in 10 hours. Who has the greatest productivity? __________________________________________________4985467585300Jack 25/5 = ______ Baskets per hourWalter 36/6 = ______ Baskets per hourRudy 40/10 = ______ Baskets per hourSam 22/4 = ______ Baskets per hourJim 50/10 = ______ Baskets per hour_________________________ has the greatest productivityHouseholds and FirmsMarkets consist of Buyers (_______________) and Sellers (________________)Household – ________________________________________________________________ living in a residenceConsumers - use the _____________________________________________ to satisfy wants and needsFirm – _____________________________________________ that uses resources to ___________________________________________, which it then sellsSuppliers – transform “________________________” (F.O.P.) into “__________________________” (consumer products)Advantages1.2.3.Disadvantages1.2.3.Mixed EconomyMixed—Decisions are made by a _______________________ of ____________three types of economic ________In the “real world” all systems are ___________________Types of mixed economiesMost economies emphasize ____________________; U.S. basically has ___________________Many European countries have ____________________________________________________France = ____________________________________________________________Sweden = __________________________________________________________Namibia ___________________________________________________________8477252679700041338504381500Role of the Government in a Mixed Economy 1) Government as a ______________________Public Sector-- ________________________________Examples: ___________________________________________Private Sector-- _________________________________2) Redistribution of ____________________________When the government takes from one group and _____________________________Examples: ______________________________________3) Protect _________________________Right to own ___________________________Examples: ______________________________________4) Market _____________Negative Externality--_____________________________Examples: ______________________________________5) Government as a ________________________________Regulation—Government creates ________________________Deregulation—Government reduces ____________Tradition Command Market What to Produce?How to Produce it?For Whom to Produce?Tradition Command Market Examples1.2. 3.1.2. 3.4. 1.2. 3.4. 5. 6.7.8.9.Adv.1.2. 1.2. 1.2. 3.4. 5. 6.Disadv.1.2. 1.2. 3.4.5.1.2. 3.4.Economic Goals and the 3 systemsEconomic Goals Market Command Tradition Economic FreedomEconomic EfficiencyEconomic Security Economic Predictability Economic Equity Economic Growth Economic Innovation Study Guide– Economic Systems, Goals and the Circular Flow ModelAnswering the Three Economic QuestionsAn organized way of providing goods and services in society is known as an ________________________________The Three Key Economic Questions are _____________________________________________________________List the 8 economic goals _____________________________________________________________________________________________________________________________________________________________________How are the three economic questions answered in a traditional economy? ____________________________________________________________________________________________________________________________How are the three economic questions answered in a command economy? _____________________________________________________________________________________________________________________________How are the three economic questions answered in a market economy? _______________________________________________________________________________________________________________________________The Free MarketBuyers and sellers meet to exchange goods and services at a ____________________________________________Individuals and Businesses own the factors of production in a ____________________________________ economyAnother name for free market is ___________________________, which indicates the ability to profit on the F.O.P.__________________________ and __________________________ interact in the product and factor markets.What is the difference between an input and an output? _______________________________________________________________________________________________________________________________________________________________________________ is the average amount of output per unit of input.Mary looks over reports on four of her workers. Jack made 20 baskets in 5 hours. Walter made 30 baskets in 6 hours. Rudy made 100 baskets in 10 hours. Sam made 28 baskets in 4 hours. Jim made 10 baskets in 10 hours. Who has the greatest productivity? ________________________Goods and services are purchased by households/consumers in the ________________________________ market. Productive resources (Factors of Production) are provided in the __________________________________ market.____________________________ was a Scottish Professor that wrote the ________________________________, which became a cornerstone to modern-day market economic philosophy.He believed the government should adopt a Laissez-Faire philosophy, which infers that the government should _____________________________________________________________________________________________He wrote about a metaphorical self-regulation of the marketplace, known as the ____________________________Command Economies____________________________ was a German philosopher that studied economic systems in Europe, he wrote the _______________________________________, which became the cornerstone for modern-day communist nations.What did he believe about capitalism? ______________________________________________________________He was a supporter of ________________________________ and ________________________________, which were terms that he used to describe the equal distribution of wealth and “no-class” economic system in society.North Korea exhibits an ___________________________ style of governmental control, which commands strict obedience from their citizens and does not allow individual freedom.American Free EnterpriseIndividuals’ right to choose your occupation and what to buy and firms’ right to hire or produce refers to the _____________________________________ found in the United States.The Fifth Amendment of the Constitution protects us from the federal or state governments taking our property for their own use because of private _________________________________________.The force that encourages people and organizations to improve their material well-being through the pursuit of money or a better standard of living is ______________________________________.When individuals willingly engage in a transaction where both parties benefit they have participated in a ______________________________________________.____________________________________________ is the rivalry among sellers to attract customers while lowering costs. This leads to lower prices, more variety and quality of products.The consumer is the most important force in the economy because they determine what is produced through their purchases. The fact that the “customer is always right” is represented by the term _____________________________Briefly describe the role of the government in the U.S. economy ______________________________________________________________________________________________________________________________________The _____________________________sector is the part of the economy that involves the transactions of the government.The _____________________________ sector is the part of the economy that involves the transactions of individuals and businesses.A _________________________________is someone who would not choose to pay for a certain good or service, but who would get the benefits of it anyway if it was provided as a public good.A __________________________________________ is an economic side effect of a good or service that generates benefits or costs to someone other than the person deciding how much to produce or consume; positive or negative.Give an example of a positive externality ___________________________________________________________Give an example of a negative externality __________________________________________________________ ................
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