<p>Name ______Date ______Economics Unit 2 - Chapter 2</p><p>Economic Systems </p><p>Types of Economic Systems</p><p>• Economic system:</p><p>• Three basic systems: </p><p>▫ </p><p>▫ </p><p>▫ </p><p>• TYPE 1: </p><p>▫ </p><p> ▫ </p><p>Characteristics of Traditional Economies</p><p>• Advantages and Disadvantages</p><p>▫ Advantages: </p><p> </p><p>▫ Disadvantages: </p><p> </p><p> low productivity results in low standard of living </p><p>Types of Economic Systems</p><p>• TYPE 2:Command Economy</p><p>▫  </p><p> </p><p>▫ </p><p>▫ </p><p>Government Controls</p><p>• EXAMPLE: Socialism and Communism</p><p>▫ Karl Marx influenced some societies to adopt command economies</p><p> socialism— </p><p> communism— </p><p>▫ Authoritarian system requires total obedience to government</p><p> • Socialism and Communism</p><p>▫ Democratic socialism established under democratic political process</p><p> </p><p> </p><p> </p><p> </p><p>Karl Marx: Economic Revolutionary</p><p>• A New View of Economics</p><p>▫ </p><p>▫ </p><p> </p><p> ▫ Wrote The Communist Manifesto (with Friedrich Engels), Das Kapital</p><p>Command Economies Today</p><p> modern telecommunications bringing about change</p><p>▫ </p><p>North Korea</p><p>▫ Communist North Korea used resources for military, not necessities</p><p> </p><p> </p><p> </p><p> </p><p>• Impact of Command Economies ▫ In theory, command systems fair to everyone; In practice, many disadvantages</p><p> </p><p> workers have little motivation to be productive or conserve resources</p><p> </p><p> people sacrificed to carry out centrally planned policies</p><p>Types of Economic Systems</p><p>• TYPE 3: Market Economy</p><p>▫ </p><p> </p><p> </p><p>▫ Today’s Mixed Economies</p><p>• </p><p>▫ </p><p> most common type of economic system</p><p>▫ Traditional, command, market economies adopt elements from others </p><p>Life in a Mixed Economy</p><p>▫ </p><p> traditional: </p><p> command: </p><p> market: Today’s Mixed Economies</p><p>▫ </p><p>▫ European countries greater mix of market and command elements</p><p> France— </p><p> Sweden— </p><p> Namibia— </p><p>Trends in Modern Economies</p><p>• Changes in Ownership</p><p>▫ Nationalize </p><p>▫ Privatize </p><p>Increasing Global Ties ▫ Growth of global economy: </p><p> recent agreements open up world markets to trade among countries</p><p> </p><p> phone, computer links make financial transactions quick, inexpensive</p><p> </p>