ECONOMICS PART 2

ECONOMICS PART 2

SS6E7 Analyze different economic systems.

B:  Explain that countries have a mixed economic system located on a continuum between pure market and pure command

C: Compare the basic types of economic systems found in the United Kingdom, Germany, and Russia.

MAJOR ECONOMIC SYSTEMS

• Command economy

• Traditional economy

• Market economy

• Mixed economy

Multiple Choice

in which major economic system does the government have all the power?

• Mixed

• Command

• Traditional

• Market

Multiple Choice

In which system would you probably inherit your mother or father’s job?

• Market

• Command

• Mixed

• Traditional

Fill in the Blank

Aruba is a Caribbean Island off the coast of northwestern Venezuela. Aruba has an area of 75 square miles. Because of the dry and rocky terrain, most food must be imported. The island was “discovered” in the second half of the twentieth century by vacationers. Now tourism dominates the economy. Hotels are privately owned as are the restaurants. The government spends a lot of money trying to attract visitors to the island. The Smith family is going to spend two weeks on vacation in Aruba. They will enjoy the beaches, water sports, the sunny weather, great food, and many other exciting activities. The government and private business are working together. This is a perfect example of ____ economy.

ECONOMIC CONTINUUM

The economic continuum is based on government control. More government control means the closer a country is to a command economy. Less government control means the closer a country is to a market economy.

ECONOMIC SYSTEM CONTINUUM

LET'S LOOK AT THREE EUROPEAN COUNTRIES ECONOMIC SYSTEMS

• UNITED KINGDOM

• GERMANY

• RUSSIA

UNITED KINGDOM

Service industries like banking, insurance, and business services account for most of the UK’s gross domestic product

Over the decades, the government has turned over many state-owned companies to private ownership setting up free market competition

In short, the United Kingdom has a mixed market economy because some of its economy is driven by producers, consumers, and markets while other aspects of its economy are controlled by the government

GERMANY

An export-based economy focused on manufacturing and products [relies on global markets]

There is also still an issue with updating the Eastern German economy to compete and operate equally with Western Germany [Western Germany invests money in Eastern German states to help modernize and update factories and production lines. West Germany had to bring East Germany’s command economy into its market economy]

Germany’s economy combines a market system, some government control, and even social welfare where help is given to the poor

RUSSIA

• Russia has struggled as it transitions from a command economy under the Soviet Union to a mixed market economy today

• Many government-owned companies are being sold to private businesses, but the Russian government is still largely involved with many aspects of the economy

• Russia faces financial problems and huge costs to improve its old plants and industries to be more efficient

Poll

According to what you just read about the UK, Germany, and Russia's economic system, which country do you think is closer to the command economy on the economic systems continuum?

• United Kingdom

• Russia

• Germany

• none

• all

RUSSIA

There is more government control of the economy in Russia than in Germany or the United Kingdom; therefore, Russia lies closer to the command side of the continuum.

Multiple Choice

My new Nike shoes were introduced in May for $129.99, but by December they are being sold for $69.99. According to the law of supply and demand, which is most likely to be true about the Nike shoes.

• Supply for the Nikes are was high, but the demand was low.

• Supply for the Nikes was low, but demand was high.

Multiple Choice

Relationship between the quantity of a commodity that producers wish to sell at various prices and the quantity that consumers wish to buy.

• Scarcity
• Supply and Demand

Multiple Choice

The amount available

• supply

• demand

• import

• natural resource

Multiple Choice

A person who purchases a good or service

• consumer

• taxes

• supply

• good

Multiple Choice

A person who provides a good or service

• producer

• need

• want

• consumer

Multiple Choice

Which two countries would likely trade with each other?

• Two countries that are located far away from each other

• Two countries that both have the same population.

• Two countries who people both speak the same language.

• Two countries that each specialize in producing different goods.

Multiple Choice

Which of the following are examples of services?

• Apples, Computers, Clothing

• Firemen, Police Officers, Soldiers

• Health, Love, Friendship

Multiple Choice

Which of the following are examples of goods?

• Apples, Computers, Clothing

• Firemen, Police Officers, Soldiers

• Health, Love, Friendship

Multiple Choice

These productive resources are raw materials that come from nature or the earth that people use to make goods.

• Natural Resources

• Human Resources

• Capital Resources

Multiple Choice

When a company has more supply than demand this is known as a _______________. 

• Equilibrium 
• Shortage
• Surplus 

Multiple Choice

__________________ is the willingness and desire of a peson to buy a good. 

• Supply
• Service
• Demand

Multiple Choice

____________________ is the amount of a good that a company has. 

• Supply
• Demand
• Good