Principles of Economics: Economic Systems

What is an economic system?

A system of production, resource allocation, government policy and distribution of goods/services in our society.

What is capitalism also called?

Free market system. Because the government did not control the market.

What does capitalism promote?

Innovation and Research & Development (R&D)

What is a U.S. patent?

Determines that you are the first and original inventor of your product

How long does a U.S. patent last for?

20 years

What can happen after a U.S. patent expires?

Anyone is allowed to use and copy the inventor’s idea and product.

How many U.S. patents are issued to foreign inventors/companies?

51% of U.S. patents

In a capitalistic government, consumers have access to…

wide variety of products and goods/services.

What does capitalism allow?

It allows the acquisition of wealth through hard work and effort.

What is capitalism all about?

Individual freedom and choice.

What is capitalism?

System controlled by a private sector for profit.

What is socialism?

System where production and distribution are controlled by society as a whole.

In socialism, what does the government own?

Factors of production (land, labor, capital, and natural resources)

In socialism, what does the government decide?

What to produce, how much to produce, and who to produce for.

What does a socialist government focus on?

Equality, meaning very low poverty rates. Large welfare programs are in place with the goal of keeping people out of poverty.

Socialist governments offer free…

Healthcare, education, and childcare.

In a socialist country, workers are…

Protected. It’s very hard to fire someone.

What is command economy?

The government controls all production and income. The government has a “master plan” for its society.

What is the goal of a command economy?

To replace profits with equality, no competition, no innovation, no research and development, very low unemployment rate, no shortages/excess, and variety of goods and services.

What is a mixed economy?

System that has features of all 3 economic systems.

What is true about every country?

No country is 100% purely one type of economy.