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Economic Systems
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How about a quick field trip? Maybe a cruise would be fun.
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Or not►I’m
afraid we’re all going to get to know each other a lot better.
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What now?► We
know who will be in charge.
► But you guys will keep busy too!
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Seriously though . . .
►We are going to have to put together an economy.
►What questions do we need to ask and answer.
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3 Basic Economic Questions
►There are three questions that all economies have to answer.
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What will we produce?
►What goods and services do we need? What would we like to have with the resources we have left?
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How will we produce it?► What
technologies will we use and how will we organize production?
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How will we distribute what is produced?
►Who gets what? This is the one that gets really tense sometimes.
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We classify economies not by what the answers to the
questions are, but by who answers them.
►What are the possibilities?
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The government can answer them.
► This is called a command economy, or sometimes a centrally planned economy.
► Communism is perhaps the most obvious example.
► Command economies are old though, like the tributary economy.
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People can answer them for themselves.
►This is called a free market, or just market economy.
►We like to say our economy is a free market economy. Is it really?
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There’s one other possibility.
►Dead people?!?►If we just do what we’ve always done,
we call it a traditional economy.
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Most economies in the world today are really mixed
economies.
►These combine elements of command, market, and even traditional economies.
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How is the US economy one that mixes elements of all three?
►However, we lean most heavily to a market economy, least to traditional.