Economics, Chapter 2, Section 3: Centrally Planned Economies

[Pages:5]Name ___________________________________

Economics, Chapter 2, Section 3: Centrally Planned Economies

Standard: PA 6.1.12.A

PA 6.1.12.C

PA6.2.12.A

o Explain why markets exist. o Analyze a circular flow model of a free market economy. o Understand the self regulating nature of the marketplace. o Identify the advantage of a free market economy. Objectives: Describe how a centrally planned economy is organized. Analyze the centrally planned economy of the former Soviet Union. Identify the problems of a centrally planned economy.

Remember, in a __________________, individuals & businesses make voluntary transactions, but in _________________ the ____________ controls everything

In centrally planned economies, the central government answers the _____________________________ (not the producers or consumers)

This central bureaucracy _______________ what items get produced, ______they are produce, and also __________ them once they are produced.

Government owns both __________and __________, and tells people where they ________and what ____________________________.

Socialism:

Political philosophy based on the belief that __________means should be used to evenly _________- wealth throughout a society.

Communism:

A political system characterized by a centrally planned economy with ________________________ power resting in the hands of the central government

Socialist:

argue that real _________ can only exist when _____________ is coupled with ____________, which is only possible if the public controls the centers of economic power socialist nations may be _______________, but the government still exercises ________________________

Communist: Believe that a socialist society can only occur after a ___________________ _______________? requiring strict obedience to an authority (ex: dictator) Do not allow _____________________________.

 Socialist government can still be __________; communist __________.

in the old Soviet Union, the gov't controlled everything & owned everything while deciding how much each individual would receive (nothing voluntary--everything decided by the gov't)

Collectives? large _____________ from the state to groups of _____________

Heavy Industry? industry that requires a ________________ and that produces items used in other industries (ex: chemicals, steel, and heavy machinery manufacturing)

Soviet Union's biggest problem was that they ________ too heavily on heavy industry; wanted to make a lot of missiles, send someone to space, & make large ___________ but stopped growing _______________

This focus made it difficult for the people to get their basic needs provided for (~10 million starved to death on 2 different occasions during the 20th century)

Went from being one of the world's _____________ of ________ to one of the world's leading _____________.

Centrally Planned Economies Lack:

The concept of _________________________ Market forces of Self Interest (__________________) and Competition

(____________________)

Problems with Centrally Planned Economies:

Poor __________, shortages of non-priority goods and services and diminishing production.

No incentive to _________, since you won't benefit anyhow discourage any ________, including ______________. large expensive bureaucracy _______________ to adjust to consumer demands sacrifice _______________ to pursue ____________ because of this they cannot meet

consumers demand Performance almost always falls short of the ideas of which the system is built.

Chapter 2, Section 4: Modern Economies

Objectives:

Explain the rise of mixed economic systems Interpret a circular flow diagram of a mixed economy. Compare the mixed economies of various nations along a continuum between centrally planned and free

market system. Understand the role of free enterprise in the economy of the United States.

All modern economies are mixed; some lean toward market and some lean towards centrally planned.

_________________ and other early free market philosophers believed that the market economy would provide the greatest benefit for consumers and __________ the standard of living for _____________.

Laissez Faire? the doctrine that states that government generally _______________ intervene in the marketplace

Some needs and wants of modern society are ____________ to answer in the market place.

Even Smith agreed that there was a need for a _____________________ of government intervention otherwise we wouldn't have roads, schools, hospitals, etc.

As time goes on however, the government's role continues to increase because ___________________________________________________.

Markets could not operate without some government intervention, usually through laws that ________________________________.

In mixed economies the Government interacts in all spheres of the economic system (see Circular Flow) p.42

 ________ system has ___________ the problem of answering the 3 questions perfectly & many vary in their degree of gov't control.

Free enterprise? an economic system characterized by _____________________ _______________________; investments that are determined by private decision rather than by state control; and determined in a free market

Although ________ economies are mixed, nations still vary greatly in whether they are controlled more by consumers or the government.

Continuum? a range with no clear divisions (pg. 43)

 mixed economies ________________________________________ in the economy at the centrally planned end of the continuum_____________________________ of the

economy, but there is still some degree of private production For example, China currently experiencing transition to become more of a market

economy

Transition? period of change in which an economy ______________________ from a centrally planned economy toward _______________________________.

Privatize? to sell state-run firms to individuals

On the free market end, _________________ controls most everything, but the _____________ still sets some laws (like wage and price controls on rent & public services)

US government has free enterprise economy; gov't provides vital services, but doesn't play a big role in the economy

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download