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11.3 The Three Types of Economies

11.3 The Three Types of Economies. Traditional Economies. Passed along from elders to youth Roles of fathers, mothers, sons, daughters stay the same generation after generation What to produce? Enough to meet needs How to produce? The same way as before – whatever that way was

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11.3 The Three Types of Economies

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  1. 11.3 The Three Types of Economies

  2. Traditional Economies • Passed along from elders to youth • Roles of fathers, mothers, sons, daughters stay the same generation after generation • What to produce? • Enough to meet needs • How to produce? • The same way as before – whatever that way was • Who gets what? • Based on pre-assigned roles • Who owns the resources? • Usually individuals, but not much choice on how to use them

  3. Command Economies • The government makes the important economic decisions • Usually includes things like banking, manufacturing, farming, & communication • Sometimes includes who does what job and wages • Pharaohs in Egypt, and the now gone Soviet Union were command economies

  4. Command Economies • The central planning group decides what is to be produced and makes sure the resources are available • Consumers have very little power in this type of econ. • Often in command econ. Who gets what is also a decision for the gov. • This can lead to greedy dictators using the resources for themselves

  5. Market Economies • Individuals make economic decisions • The US has a market economy (mostly) • Everyone is part of the process • People are free to choose how to use their resources • Therefore people who have more resources can afford to more goods and services • Often this produces competition • Producers compete to satisfy the wants of consumers

  6. Market Economies • Profit is the incentive that encourages people to make the choices they make • It is the potential for profit that leads people to invest in businesses • Free Enterprise and Capitalism are synonyms for Market economies • Free enterprise – individuals make the decisions with little control from the gov. • Capitalism – individuals make the decisions based on the saving resources as capital and using that capital as production

  7. Modern-Day Economies • Most are mixed economies • China and the US do this differently • China • In the 1980s China was strict command economy • By the 90s and 2000s the government in China relaxed • Allowed some free enterprise • Is selling some state owned businesses • Allows foreign businesses to come and invest in China • One of the fastest growing economies in the world.

  8. Modern-Day Economies • Most are mixed economies • China and the US do this differently • US • Mostly a market economy • Some services are provided by the government • Roads, police, fire department, airports • Government sets minimum wages

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