Economics

1. Economics

2. Economic Systems € £ ¥ $ 5 Types of Economic Systems - 2 are Free-Market Economies - 3 are Centrally Planned Economies

3. Keys to a good economy Low unemployment Low and stable inflation Thriving stock market Income equality Good education

4. 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

5. Free Market • Traditional • Capitalism Centrally Planned • Socialism • Fascism • Communism

6. 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

7. 1. Traditional Economy Also called “the barter system” People trade goods and services for other goods and services directly No currency is involved

8. 2. Capitalism freedom choice • 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 incentive buyers sellers hands off economy

9. 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

10. 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

11. 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

12. 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

15. Levels of Industrialization Three Levels of Industrialization - UnderdevelopedCountries - Developing Countries - Developed Countries

16. Underdeveloped Countries slow 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

18. 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

19. 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

20. Source: http://www.worldbank.org/depweb/english/beyond/beyondco/beg_03.pdf