Download - ECOGOV: 2.4 MODERN ECONOMIES
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COMPLETE PREP:
2.4 MODERN ECONOMIES
SECTION FOCUS AND KEY TERMS
TURN TO PAGE 40
THEN START READING SECTION
ECONOMICSMR. HOOD03 MARCH 2014
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2.4 MODERN ECONOMIES
ECONOMICSMR. HOOD`S NOTES03 MARCH 2014
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NO GOVERNMENT RELIES ONLY ON CENTRALLY PLANNED
ECONOMY
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NO GOVERNMENT RELIES ONLY
ON FREE MARKET ECONOMY
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MOST ECONOMIES ARE A
MIXTURE OF ECONOMIC SYSTEMS
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MIXED ECONOMIES BLEND THE MARKET WITH GOVERNMENT
INTERVENTION
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OBJECTIVE 1EXPLAIN THE RISE OF
MIXED ECONOMIC SYSTEMS.
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CENTRALLY PLANNED
ECONOMIES HAVE DRAW BACKS
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EVEN MARKET
ECONOMIES HAVE DRAW BACKS
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ADAM SMITH PREACHED LAISSEZ
FAIRE
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GOVERNMENT GENERALLY SHOULD NOT INTERVENE IN
THE MARKET
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EVEN SMITH ACKNOWLEDGED NEED FOR CERTAIN LIMITED DEGREE OF GOVERNMENT
INTERVENTION
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IN RECENT YEARS GOVERNMENT INTERVENTION HAS
BECOME GREATER
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SOME NEEDS + WANTS DIFFICULT
TO ANSWER IN MARKETPLACE
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EXAMPLE: NATIONAL DEFENSE
OR EDUCATION
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PRIVATE PROPERTY +
PATENT CONTRACTS
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GOAL IS FINDING A BALANCE BETWEEN CONTROL + FREEDOM
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OBJECTIVE 2INTERPRET A
CIRCULAR FLOW MODEL OF A MIXED
ECONOMY.
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GRAPH ILLUSTRATES GOVERNMENT`S ROLE IN A
MIXED ECONOMY
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LIKE BUSINESSES, GOVERNMENT PURCHASES
LAND, LABOR, CAPITAL
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EXAMPLE: US GOVERNMENT HAS 2.8
MILLION EMPLOYEES
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GOVERNMENTS PURCHASE GOODS
AND SERVICES
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GOVERNMENTS PROVIDES GOODS AND
SERVICES
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GOVERNMENTS COLLECT TAXES FROM HOUSEHOLDS +
BUSINESSES
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AND TRANSFER MONEY
EXAMPLE: SOCIAL SECURITY
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OBJECTIVE 3COMPARE THE MIXED ECONOMIES
OF VARIOUS NATIONS ALONG A CONTINUUM BETWEEN
CENTRALLY PLANNED AND FREE MARKET SYSTEMS.
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A CONTINUUM IS A RANGE WITH NO CLEAR
DIVISIONS
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ONE END IS CENTRALLY PLANNED ECONOMY, OPPOSITE IS FREE
MARKET ECONOMY
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NORTH KOREA OCCUPIES ONE END OF
THE SCALE
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AT THE OTHER END,
IS HONG KONG
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MANY COUNTRIES IN TRANSITION, MOVING AWAY FROM
CENTRALLY PLANNED ECONOMY
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TO MAKE TRANSITION, STATE FIRMS MUST BE
PRIVATIZED
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DIFFERENT MIXED ECONOMIES PLOTTED ON
CONTINUUM SCALE
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USA HAS A FREE MARKET WITH A LITTLE GOVERNMENT
INTERVENTION
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OBJECTIVE 4UNDERSTAND THE
ROLE OF FREE ENTERPRISE IN THE ECONOMY OF THE UNITED STATES.
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USA HAS FREE ENTERPRISE
ECONOMY
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GOVERNMENT INTERVENES TO
KEEP ORDER
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US HAS HIGH LEVEL OF ECONOMIC
FREEDOM
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LOW LEVEL OF
GOVERNMENT REGULATION
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