NAME:_______________________________________________ Class:________ ECONOMIC $Y$TEM$ An economic system describes___________________________________________________ WHY does every country need an economic system?__________________________________ ____________________________________________________________________________ The 3 Basic Questions every economic system must answer: 1.___________________________________________________________________________ 2.___________________________________________________________________________ 3.___________________________________________________________________________ Economic System Who answers the 3 Basic Questions? Examples/Notes Traditional Economy Command Economy Market Economy aka Capitalism Hallmarks: 1. 2. 3. Mixed Economy aka Mixed Market 4. 5. NAME:_______________________________________________ Class:________ ECONOMIC $Y$TEM$ An economic system describes how a country’s economy is organized. WHY does every country need an economic system? In every country there is a scarcity of resources; countries need economic systems to determine how to use its resources. The 3 Basic Questions every economic system must answer: 1. WHAT TO PRODUCE? (what kinds of goods/services?) 2. HOW TO PRODUCE? (what will be used to make goods/services?) 3. FOR WHOM TO PRODUCE? (who gets to have the goods/services?) Use your Class Reading and Textbook to complete the following table! Who answers the 3 Basic Questions? Examples/Notes Traditional Economy Based on tradition – the way things have always been done Barter system African tribes Any tribal society in developing countries Command Economy The Government owns land; determines wages and prices; assigns jobs Former Soviet Union North Korea Cuba Individual buyers and sellers 1. Private Ownership Economic System Market Economy Capitalism Free Enterprise Private Enterprise 2. Entrepreneurs 3. Competition 4. Price System: Profit 5. Freedom of Choice Mixed Economy Mixed Market Government and Individuals make decisions U.S. Canada, Japan, most European nations. There are NO TRUE market economies today. All are MIXED. NAME:_______________________________________________ Class:________ EXAMPLES OF GOVERNMENT INVOLVEMENT IN U.S. ECONOMY: Social Security Medicare/Medicaid Food Stamps Public Housing Pollution Law (Regulations) Unemployment Insurance Stimulus Package Bank Bailouts Post Office Business Licenses NAME:_______________________________________________ Class:________ ECONOMIC $Y$TEM$ An economic system describes ______________________________________. WHY does every country need an economic system? _______________________________________ __________________________________________________________________________________ The 3 Basic Questions every economic system must answer: 1. WHAT TO_______________? (what kinds of goods/services?) 2. ________TO PRODUCE? (what will be used to make goods/services?) 3. _______ ________________TO PRODUCE? (who gets to have the goods/services?) Economic System Traditional Economy Who makes the economic decisions? Examples/Notes Based on _____________ the way things have always been done _____________ system Command Economy The ________________ owns land; determines wages and prices; assigns jobs Market Economy Individual ___________ 1. _____________Ownership and_________________ 2. __________________ Capitalism Free __________ ___________ 3. __________________ 4. ____________ System: ______________ Enterprise 5. Freedom of ____________ Mixed Economy Mixed Market ________________ and __________________