<p> Chapter 2 Economic Systems</p><p>Section 1 Answering the Three Economic Questions</p><p>Systems and Questions</p><p>• An economic system is the ______used by a society to produce and ______goods and services. The economic system a society employs depends on the societies goals and values. • Because economic resources are ______every society must answer three key economic questions.</p><p>– What goods and services should be produced? – How should these goods and services be produced? – Who consumes these goods and services?</p><p>WHAT?</p><p>• It’s obvious we need ______and shelter, but modern societies face additional considerations. How much of our ______should we devote to national defense, education, public health and welfare, or consumer goods? (Guns v. Butter) Each production ______that a society makes comes at an ______.</p><p>How?</p><p>• How should we use our resources to ______goods and services? There are ______ways to produce what we want and need – all of which require land, ______and capital. </p><p>Who</p><p>• By the end of the 1990s, the top ____ goods manufacturers in the U.S. were launching an average of 13 _____ products EVERY ______! In the 50’s retail stores had 3,000 products, now they have ______. But quantities are still ______unlimited. • Societies decide how to distribute the available goods and services</p><p>Economic Goals and Societal Values</p><p>• Resources are always ______thus societies maximize what they can get for the resources that they have. It increases its economic ______if a society ______assess what to produce.. This cuts ______. </p><p>Economic Security and Predictability • We do not like ______. We want to know that we can get milk, bread and water each time we go to the ______store or gas when we need it. • If you made a list of personal goals and compared it with a list of a person of your age made in another part of the world, the list would be very different because of their economic system.</p><p>• List 2 goals you have for 2009 • 1.______</p><p>• 2.______</p><p>• We also want to know that there is ______if someone needs it. Most feel that governments should supply ______, or sets of government programs that protect people experiencing unfavorable economic conditions. </p><p>• Safety nets or sets of government programs ______people experiencing ______economic conditions are provided by many countries. List 3 safety nets that the government provides: 1. ______2. ______3. ______</p><p>Economic Equity, Growth & Innovation</p><p>• Most believe in equal pay for equal work, but society does not ______all jobs equally and not everyone can work. A nation’s economy must ______for a nation to improve its ______or level of economic prosperity especially when population is growing. Innovations in ______increase the efficiency of production and usher in new ______.</p><p>• List 4 goods/services that began in your lifetime: 1. ______2. ______3. ______4. ______</p><p>Should we all have the same amount?? ______• Who should determine who has what? ______</p><p>• Why aren’t all jobs valued the same? ______</p><p>• Is it ok/fair that an athlete makes millions every year, while a teacher may barely make a million in a lifetime? ______</p><p>– Should the government step in? ______Goals</p><p>• Environmental protection, full employment, universal medical care, is some concerns of countries. All nations must prioritize the economic goals, or arrange them in order of importance. One fact remains; achieving any economic goal comes only with a ______. Make a pie Chart below & decide how much the government should spend on each area: Social Security, Defense, Medicare, Health, Education, Veterans benefits, Transportation, Agriculture, Space/Science, General Government</p><p>Economies and Values</p><p>• A traditional economy relies on ______, or ritual to decide what and how to produce and to whom to distribute. There is no room for ______. It revolves around the ______, and is usually divided along ______lines. These communities are small and close, and support the entire group versus ______. They ______, rarely adopt new technology, lack modern ______and have a ______standard of living.</p><p>Market</p><p>• Market economies base economic decisions on ______and on exchange and/or trade. They are called free markets, or ______.</p><p>Command</p><p>• In a centrally planned economy, the ______alone decides how to answer ______three key economic questions. Mixed • Most modern economies are mixed economies – market=-based with governments limited role.</p>