systems and goals
economic systems
how a nation is organized for production
how they use factors of production
*these are models in reality no economic system complete fits any of these
traditional, command, market, mixed
traditional
you prioritize labor and land and not capital and entrepreneurship
people’s economic roles are the same as those of their parents and grandparents
tradition and customs decide what is produced (ex. amish)
*do not care about capital and technology and more on efficiency
command
when the government has total control (controls the factors of production) of the country
they makes all the decisions on how to use resources
what goods and services will be produced
(commonly seen and worked in dictator-led countries —> north korea)
*cannot freely open or start a business
you’re working because of your talent and the government need your resources and not money
[goals: equity (everyone paid the same), stability, efficiency (government utilizing factors of production)]
market
no government intervention (laissez-faire)
price for goods and services will be influenced by consumers
*no country today has a complete market system - no efficiency
ex. america in the progressive era —> america, india, and japan are very close to this today
[goals: freedom, growth (byproduct of freedom), efficiency (individuals being self-reliant)]
mixed
SOME government intervention
*varies on nation
decisions by consumers, businesses and government help determine economic activity
includes social security, welfare, safety inspectors, healthcare
*most of today’s economies are mixed
ex. america, india, japan, germany, china, russia
[goals: freedom (entrepreneurship), security (government regulation), growth]
economic social goals
every country has 6 goals
efficiency, equity, freedom, growth, security, stability
*how they rank the goals determines which economic system they have
every nation cannot prioritize all goals at once
efficiency
keeping track of all of a nation’s resources to make sure everything is being used to benefit the nation
making use of all factors of production and resources
ex. tax breaks for renewable sources, everyone will get two toves of bread every week
equity
command:
everyone has a job and is paid the same
equal distribution of wealth
ex. doctor, teacher, garbage man, waiter —> all paid the same
mixed-market: (usa)
everyone has equal economic opportunity to get rich
kid from india gets more financial aid from the government
freedom
people decide how they want to spend their money, choose their career, and create their own business, buy/sell property
*NOT 1ST AMENDMENT RIGHTS
growth
countries want to grow and make more money each year —> more production
ex. watch the stock market and unemployment rate
security
protecting people from poverty due to unemployment, homelessness, and hunger
government could provide jobs, housing, healthcare
usa government gives unemployment benefits, welfare food stamps, minimum wage
stability
economy does not change day to day
if it does, government steps in and takes control
ex. government controls all prices to make there are no ups and downs in society
economic systems
how a nation is organized for production
how they use factors of production
*these are models in reality no economic system complete fits any of these
traditional, command, market, mixed
traditional
you prioritize labor and land and not capital and entrepreneurship
people’s economic roles are the same as those of their parents and grandparents
tradition and customs decide what is produced (ex. amish)
*do not care about capital and technology and more on efficiency
command
when the government has total control (controls the factors of production) of the country
they makes all the decisions on how to use resources
what goods and services will be produced
(commonly seen and worked in dictator-led countries —> north korea)
*cannot freely open or start a business
you’re working because of your talent and the government need your resources and not money
[goals: equity (everyone paid the same), stability, efficiency (government utilizing factors of production)]
market
no government intervention (laissez-faire)
price for goods and services will be influenced by consumers
*no country today has a complete market system - no efficiency
ex. america in the progressive era —> america, india, and japan are very close to this today
[goals: freedom, growth (byproduct of freedom), efficiency (individuals being self-reliant)]
mixed
SOME government intervention
*varies on nation
decisions by consumers, businesses and government help determine economic activity
includes social security, welfare, safety inspectors, healthcare
*most of today’s economies are mixed
ex. america, india, japan, germany, china, russia
[goals: freedom (entrepreneurship), security (government regulation), growth]
economic social goals
every country has 6 goals
efficiency, equity, freedom, growth, security, stability
*how they rank the goals determines which economic system they have
every nation cannot prioritize all goals at once
efficiency
keeping track of all of a nation’s resources to make sure everything is being used to benefit the nation
making use of all factors of production and resources
ex. tax breaks for renewable sources, everyone will get two toves of bread every week
equity
command:
everyone has a job and is paid the same
equal distribution of wealth
ex. doctor, teacher, garbage man, waiter —> all paid the same
mixed-market: (usa)
everyone has equal economic opportunity to get rich
kid from india gets more financial aid from the government
freedom
people decide how they want to spend their money, choose their career, and create their own business, buy/sell property
*NOT 1ST AMENDMENT RIGHTS
growth
countries want to grow and make more money each year —> more production
ex. watch the stock market and unemployment rate
security
protecting people from poverty due to unemployment, homelessness, and hunger
government could provide jobs, housing, healthcare
usa government gives unemployment benefits, welfare food stamps, minimum wage
stability
economy does not change day to day
if it does, government steps in and takes control
ex. government controls all prices to make there are no ups and downs in society