Economics

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Economics
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Economic Systems

• 5 Types of Economic Systems
• - 2 are Free-Market Economies
• - 3 are Centrally Planned Economies

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Keys to a good economy

• Low unemployment
• Low and stable inflation
• Thriving stock market
• Income equality
• Good education

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• macroeconomic aims...1) low and stable
  inflation2) high and sustained economic
  growth3) balance of payments not in deficit4)
  low unemploymentmicroeconomic aims1) efficient
  resource allocation- ensure that there is no
  missing markets2) income equality

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Free Market

• Traditional
• Capitalism

Centrally Planned

• Socialism
• Fascism
• Communism

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Free Market Economies

• Individuals make their own choices, not
  government
• There is the possibility of making a bad choice
  or being swindled or cheated
• It requires each individual to know how to make
  good economic choices

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1. Traditional Economy

• Also called the barter system
• People trade goods and services for other goods
  and services directly
• No currency is involved

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2. Capitalism

• Emphasizes ______ of _____ and individual
  ________ for workers, investors, consumers, and
  business enterprises
• Free Enterprise System - _______ and ______ free
  to make their own economic decisions
• Laissez-Faire Government keeps its _____ _____
  the _________
• List of capitalist countries

freedom
choice
incentive
buyers
sellers
hands
off
economy
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3. Socialism

• Government attempts to distribute wealth _______
• Government controls _______ and _______, and
  decides what is _______
• Government owns the means of __________
• List of socialist countries

equally
wages
prices
produced
production
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4. Fascism

• Also called National Socialism
• Government _________, but does not own businesses
• ___________ sets wages and prices
• Purpose of Fascism is centralization of economic
  power to the government, and away from
  ____________
• List of Fascist countries

controls
Government
individuals
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5. Communism

• - Government has total control of all ______ of
  _________, and owns __________
• - Karl Marx, The Communist Manifesto
• Wrote From each according to his _______, to
  each according to his _____
• Recommended that workers ____________ and
  overthrow the ____________ with whatever means
  necessary
• Wrote there were 3 kinds of people
• Nobility - kings
• Bourgeoisie business owners
• Proletariat workers
• List of communist countries

means
production
everything
abilities
needs
rise up
Bourgeoisie
Karl Marx
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Tax Structures

• Flat Tax
• All persons pay the same percentage of tax
• Finland, Estonia, Switzerland pay a Flat Tax

• Progressive Tax (Suggested by Karl Marx)
• Persons pay an increasing percentage of tax based
  on income
• Most common tax in the world today
• United States has a progressive tax (in theory)
• http//en.wikipedia.org/wiki/Income_inequality_in_
  the_United_States

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Levels of Industrialization

• Three Levels of Industrialization
• - Underdeveloped Countries
• - Developing Countries
• - Developed Countries

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Underdeveloped Countries

• High Birth Rates High Infant and Child
  Mortality Rates _____ Population Growth
• No Infrastructure, Low Technology
• High Poverty, No Medical Care
• Examples Afghanistan, Niger,
• Somalia, Ethiopia

slow
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Developing Countries

• High Birth Rates Low Infant and Child Mortality
  Rates _____ Population Growth
• Some Infrastructure, Scattered Access to
  Technology
• Extremes between Rich and Poor, Some Medical Care
• Examples Most of Central and
• South America, Middle East

rapid
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Developed Countries

• Low Birth Rates Low Infant and Child Mortality
  Rates _____ Population Growth
• Lots of Infrastructure, Plentiful Technology
• Low Poverty, Good Medical Care
• Examples United States, Europe

no
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Source http//www.worldbank.org/depweb/english/b
eyond/beyondco/beg_03.pdf