Government &
Economic
Systems
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Important terms
• Sovereignty is the idea that a territory or region has
supreme authority over itself
• Autonomy is the idea that a person, state, territory,
etc. can make decisions for itself, without outside
interference
What is Government?
• Form of administering law and order in society
• Many different forms of government
o
o
o
o
o
o
o
o
o
Dictatorship
Fascist
Monarchy
Theocracy
Democracy
Republic
Oligarchy
Confederation
Federation
Government & Economics
Graphic Organizer Notes
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•
•
•
Divide paper into three columns
Column 1 – Government/Economic System
Column 2 – Definition/Description
Column 3 – Sketch image that illustrates how the
government/economic system works
Dictatorship
• One person (or small group) control all aspects of
society
• Examples: North Korea, Pol Pot Cambodia
Fascist
• Dictatorship that emphasizes the military (usually
controlled by a military leader)
• Examples: Nazi Germany, Mussolini’s Italy
Monarchy
• Ruling family with various forms of power (from
absolute to limited)
• Constitutional Monarchy: Modern United Kingdom
• Absolute Monarchy: England during Middle Ages
Theocracy
• A Deity is recognized as supreme ruler, but the
Deity’s laws are interpreted by religious people
(clerics, priests, mullahs, etc.)
• Iran, Vatican City
Democracy
• All citizens participate in making and passing laws,
few exist in modern world
o Also known as direct democracy
• Ancient Greece
Republic
• Simple definition: any govt. without a monarch
• Modern definition: constitutional govt. where
citizens have a say in how they are governed
• “rule by law”
• Rome, United States
Oligarchy
• Power rests in a small group of people
o Usually because of:
• Royalty
• Wealth
• Family ties
• Education
• Business
• Military
• Examples: Sparta, Soviet Union, South Africa
(Apartheid)
Confederation
• Collection of territories that have loosely come
together for common purposes. Usually:
o Defense
o Foreign Affairs
o Common currency
• Examples: European Union, Iroquois League,
Confederate States of America
Federation
• Collection of territories that have come together
under a strong central government; but territories
retain some autonomy.
• Examples: Malaysia, United States, Spain
What is Economics?
• Economics studies how individuals
and societies seek to satisfy needs
and wants through incentives,
choices, and allocation of scarce
resources.
Technology
Oil & fuel
Doctors
Land
Factors of Production
• Economic Resources
o Natural Resources – raw materials found in nature that are used
to produce goods
o Human Resources – people’s knowledge, efforts, and skills used
in their work
o Capital Resources – used to produce goods and services
(buildings, materials, and equipment)
• Scarcity – shortage of resources
Why Economic Systems?
• Nations use economic systems to determine how to
use their limited resources effectively.
• Primary goal of an economic system is to provide
people with a minimum standard of living, or quality
of life.
• Different types of Economic Systems
• Traditional Economy
• Market Economy (Capitalism)
• Command Economy
• Mixed Economy
Traditional Economy
• Found in rural, underdeveloped countries–
o Pygmies of Congo
o Eskimos & Native tribes
• Customs govern the
economic decisions that
are made
• Farming, hunting and
gathering are done the
same way as the
generation before
• Economic activities are
centered around the
family or ethnic unit
• Men and women are
given different economic
roles and tasks
• Advantages: people
have specific roles;
security in the way things
are done
• Disadvantages:
Technology is not used;
difficult to improve
Market Economy (Capitalism)
• Also called a Free
Market Economy or
Free Enterprise
Economy
• Businesses and
consumers decide
what they will produce
and purchase and in
what quantities
• Decisions are made
according to law of
supply & demand
• Supply and demand of
goods and services
determine what is
produced and the price
that will be charged.
• Advantage—
competition to have the
best products and
services
• Disadvantage—huge rift
between wealthy and
poor
• Note: a true market
economy does not exist.
Command Economy
• The government (or
central authority)
determines what, how,
and for whom goods
and services are
produced.
• Two types:
o Strong Command – where
government makes all
decisions (communism –
China, Cuba)
o Moderate Command –
where some form of private
enterprise exists but the state
owns major resources
(socialism – France and
Sweden)
• Advantages
o Guarantees equal standard of
living for everyone
o Less crime and poverty
o Needs are provided for through
the government
• Disadvantages
o Minimal choices
o No incentive to produce
better product or
engage in
entrepreneurship
• Also known as a
Planned or Managed
Economy
Mixed Economy (Socialism)
• Combination of
a market and a
command
economy
• Government
takes care of
people’s needs
• Marketplace
takes care of
people’s wants.
• Most nations have
a mixed economy:
United States,
England, Australia
• Advantage—
balance of needs
and wants met by
government and in
marketplace
• Disadvantage—
citizens have to pay
taxes