Command and Market Economies
and the 5 Social Goals of Economic
Systems
Ms. Helton
01/10/12
Global Issues
Bellwork
• Last week, you defined the terms “command
economy” and “market economy”. Using your
notes, contrast these two systems. Hint: the term
“command” is somewhat related to the
government type we discussed where the
government controls production
How Does an Economy Work?
• The way nations answer three basic questions
defines their economic systems.
•
1. What goods and services should be
produced?
•
2. How should the goods and services be
produced?
•
3. For whom should the goods and services
be produced?
Market Economies
▫ In a pure market economy there is
no government involvement in economic decisions.
The government lets the market answer the following
three basic economic questions:

1. What?

2. How?

3. For whom?
Command Economies
• In a command economy the government
answers the three basic economic questions.
▫ 1. What?
▫ 2. How?
▫ 3. For Whom?
Answer: Mixed Economy
• All economies in the world today are mixed.
There is some government involvement in the
economy.
• Total economic freedom is impossible
• So how does the US and other countries use
their limited resources to address the wants and
needs of their people?
How Government Blends Society and
the Economy
• Total economic freedom is impossible
• All societies establish laws that sometimes keep
people from buying things
▫ Examples?
• All goods and services that can be produced and
consumed make up the money a country’s
economy brings in
• Let’s look at the sheet labeled Activity 2 together
Gross Domestic Product (GDP)
• How economic growth is measured
• How much money a country makes in a year
divided by its population
• If the population is growing or stable, the
country has to increase the number of goods and
services it produces every year
Gross National Product (GNP)
• Total market value of all final goods and services
produced by a country (doesn’t use population)
• Example: Bread- only the final price of a loaf of
bread is used, because the price of its ingredients
(milk, flour, etc.) is already factored into that
final price
How Government Blends Society and
the Economy (cont.)
• Government bases its control of market on five
social goals: freedom, growth, stability, equity
and efficiency
• Let’s look at the worksheet labeled Activity 1
together
Group Activity
• You have 100 points that you can assign to each
of the 5 goals listed in Activity 1
• Decide which order you think would be best for a
country and give points accordingly (more
points if it’s a big deal to you)
• I will ask some groups to share their views, then
we will do a class tally of points to see our class’s
order
Exit Slip
• Use the same sheet of paper as your bellwork!
• Using the order of the goals decided on by the
entire class, answer the following: Is the fantasy
economy of the class a market or a command
economy? Justify your answer using what you
know and the sheet labeled Activity 2.
• Turn in before your leave class
• Tomorrow we will apply what we learned to
different countries