Introduction to Business

Introduction to Business Chapter 1.3 Economic Systems

Types of Economic Systems 1. ______2. ______3. ______There are no countries with these actual systems; all have a ______of some kind

Traditional Economy  Families or tribes make economic decisions based on ______and ______.  Based on ______and customs handed down through the generations  One goal is simply to ______and everyone has a role in meeting this goal  The good of the group always is put ______individual preference  Sometimes found within another economy as a ______society (Amish, tribes in South America and Africa, etc.)

Command Economy  The ______decides what goods and services to produce, how this will be done and who will get them  Government makes these decisions based on their ______rather than citizen preference  Government often owns means of production – ______and factories  North Korea and ______are closest to this type of economy Market Economy  ______makes the economic decisions  Consumers spend ______the way they wish, enter into business, _____ their labor  Producers ______what to produce and how to use their resources to make the most money possible  Individual act in their own ______which, in theory, benefits others (Adam Smith’s theory)

Characteristics of a Traditional Economy Advantages: It clearly ______the three economic questions; Produces what is best to ensure the ______of the society with little disagreement over goals and roles Disadvantages: Resistant to ______, less ______than other economies, often no personal preference about role they play or use of ______of the individual, no development of ______so standard of living is lower

Characteristics of a Command Economy ______planned economy – leaders decide specifics such as wages, who gets those wages and how they are spent (What businesses can operate in your town; What these businesses would ______and how much; ______would work in these businesses and how much each of them would ______) Problems:  ______preferences are not often taken into consideration  Development is often limited to ______areas (former Soviet Union – space travel; North Korea – weapons and arts)  Lack of ______(may even be restricted) Problems with Command  ______preferences are not often taken into consideration  Development is often limited to ______areas  former Soviet Union – ______travel  North Korea – ______and arts  Lack of ______(may even be restricted)

Characteristics of PURE Market  No ______regulation or involvement  Based only on ______/demand  Right to own property and make a______ Right to ______wealth

Disadvantages of PURE Market  No Government controls  ______and corruption are not limited  ______concerns are not addressed  Working conditions and ______pay are not priority  No way to provide public ______to those who cannot get them on their own  Tends to be a _____ in standard of living – “class” system can develop

Go to textbook pages 20-22 and define the following

Characteristics of a Mixed Economy  ______ ______ ______ ______

Benefits of a Mixed Economy (Go to Internet and research)  ______ ______ ______ ______Disadvantages of a Mixed Economy (Go to Internet and research)

 ______ ______ ______ ______

The US Economic System

Characteristics of Capitalism  ______ ______ ______ ______

Advantages of Capitalism (Research on Internet)  ______ ______ ______

Disadvantages of Capitalism (Research on Internet)  ______ ______ ______ ______