ECONOMIC UNDERSTANDINGS
Four Basic Economic Systems
(India, China, Japan, North & South Korea)
STANDARD: SS7E8a.b
Standard: SS7E8 – The student will analyze
different economic systems.
a. Compare how Traditional,
Command, and Market economies answer
the three economic questions of (1) What
to produce, (2) How to produce, and (3)
for Whom to produce.
Agenda Message: Before-school tutoring tomorrow, Tuesday
starting at 7:30a. Social Studies Progress reports will be sent
home Friday.
Standard: Analyze different economic systems by comparing
how Traditional, Command, and Market economies answer the
three basic economic questions.
Essential Question: Monday, March 3rd; What are the 3-Basic
Economic Questions that All economies must answer?
Warm-Up: What are two additional names for a Market Economy?
Today We Will:
1.
Review 3-Basic Economic Questions & Four Types of Economies
2.
The variety economies in India, China, Japan, & North Korea
E.Q. Answer for Monday March 3rd:
1. What goods and services will be produced?
2. How will the goods and services be produced?
3. Who will use the goods and services that will
be produced?
Warm-up Answer:
Liaise-faire, Capitalism, or Free Enterprise
Agenda Message: After-school tutoring tomorrow, Wednesday 4:005p. Social Studies Progress reports will be sent home Friday.
Standard: Analyze different economic systems by comparing how
Traditional, Command, and Market economies answer the three
basic economic questions.
Essential Question: Tuesday, March 4th; Why do most countries in the
world today operate somewhere between a Market economy and a
Command economy?
Warm-Up: Who takes the financial risk in starting a new business in a
market or mixed-market economy?
Today We Will:
1.
Review 3-Basic Economic Questions & Four Types of Economies
2.
The variety of economies in India, China, Japan, & North Korea
E.Q. Answer for Tuesday March 4th:
Most economies have found that they need a mix
of free market and some government control to be
successful and to protect consumers.
Warm-Up Answer:
Individual business people known as
entrepreneurs.
Review
Every society must deal with providing goods and
services for its people.
Each society must also develop an economic
system that can decide how to use the limited
resources at its disposal in order to provide
goods and services for its people.
Three basic “Economic” questions must be
answered:
1. What goods and services will be
produced?
2. How will goods and services be
produced?
3. Who uses the goods and services that
are produced?
TRADITIONAL ECONOMY
In a Traditional Economy, most of the economic
decisions are made based on custom and habit, or
how such decisions were made in the past.
Goods and services are exchanged instead of using
money as a payment in a traditional economy. This
is also known as bartering.
“No country today can be described as having a
traditional economy.”
COMMAND ECONOMY
A Command Economy is one in which government
planning groups make “all” of the 3-basic economic
decisions for the workers.
The best example of a command economy in Southern
and Eastern Asia is North Korea.
In North Korea the government owns nearly all the
important industries, factories, and businesses.
China is Changing
China was set up along a command economic
system in the 1950’s after the communist
revolution, however now the country is
beginning to make exceptions to the rule of
government control.
MARKET ECONOMY
The next basic type of economic system is a
Market Economy. In a market economy,
economic decisions are made by individuals (the
consumers) who decide what to produce and
what to buy.
Other names for a market economy are capitalism,
free enterprise, or laissez-faire.
Entrepreneurs
In a market economy, individuals who want to start
a business may do so. They take economic risk
as they invest in their new business.
If the new businesses are successful, the people
who organized and funded it will be a success
and make a profit.
If the businesses fail, the investors will lose
money.
Japan and South Korea have a market economy or
free enterprise economic systems.
Standard: SS7E8 – The student will analyze
different economic systems.
b. Explain how most countries have a
mixed economy located on a continuum
between “pure” market and “pure”
command.
A MIXED ECONOMY
Nearly all countries today have mixed economies.
In other words, they have characteristics of a
free market and free enterprise as well as some
government planning and control.
Today, no countries in the world have economic
systems that are purely traditional, purely
command, or purely market systems.
Economic Variety
There are a variety of economic systems in Asia.
Examples include China, North Korea, Japan, and
India.
China
China calls it’s economy a “socialist market
economy.” Basically, China is changing from a
command economy completely controlled by the
Chinese Communist government to a mixed
market economy overseen by the Chinese
government.
To improve its economic growth, China’s
government mixed in components of a
market economy during the last 25 years.
Those reforms have led to excellent growth
in the Chinese economy.
China is gradually reducing government control and
allowing more foreign investment. Economist
predict that China may lead the world in economic
strength (GDP) within the next 20 years!
North Korea
North Korea has a command economy controlled
by its Communist government. Government
planning groups control all the resources and
decide what will be produced and how.
Farmers work on cooperatives where up to 300
families share the work.
Unfortunately, the North Korean economy has
serious problems and the government is making
some reforms and relaxing some of its controls.
Due to it’s poor performing economy, massive food
aid from other countries have been needed to
avoid widespread starvation in North Korea.
Japan
Japan has a mixed market economy which is one of
the strongest economies in the world! With few
natural resources and little farmland, Japan has
built its economic success around manufacturing
(especially cars and electronics).
Japan imports raw materials, uses them to
manufacture goods like ships, cars, and
electronics, and exports those goods around the
world.
The Japanese government owns few businesses
other than the country’s major TV network, but
does oversee many aspects of the economy like
banking and trade.
India
India has a mixed economy that is moving away
from a command system.
After independence in 1947, India’s government
set up a command economy where it controlled
industries and production.
In 1991, India began to lift some government
control and allow citizens a role in running some
of India’s industries.
Although these reforms have been good for India’s
economy, millions of India’s people still live in
extreme poverty.