Economic Systems

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Economic Systems

• Chapter 2, Section 1

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Current Events Quiz

1. Explain the full economic impact of rising
   petroleum cost
2. According to yesterdays current event, who is
   more likely to cut down on alcohol consumption
   during downswings in the economy, the poor or the
   rich?
3. List at least two factors currently contributing
   to the current decline in the construction
   industry.

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Three Basic Questions

• What should be produced?
• How should it be produced?
• For whom should it be produced?

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Economic System

• The way that a country uses its resources to
  satisfy its citizens needs and wants
• Types of economies
• Traditional
• Market
• Command

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Traditional System

• Things are done the way theyve always been done
• Based on customs and beliefs
• Advantages?
• Disadvantages?

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Command Economy

• The government controls the factors of production
  and answers the 3 basic questions
• North Korea
• China
• Advantages?
• Disadvantages?

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Market Economy

• Individuals own the factors of production and
  make decisions through free interaction while
  looking out for own best interests
• Advantages?
• Disadvantages?

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Market

• Freely chosen activity between buyers and sellers
  of goods and services

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Circular Flow of economic activity

• Economic model
• Income flows continuously between businesses and
  consumers

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Mixed Economy

• Exhibits characteristics of more than one type of
  economic system

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Chapter 2, Section 1 Quiz

1. What are the three basic types of economic
   systems?
2. What are the 3 basic economic systems questions?
3. Describe how 1 can become 10 or more in
   economic activity.

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Assignment

• Section 1 Assessment on page 38 (1-4)
• Due start of class tomorrow, 9/5