CHAPTER 6: THE CHOICE OF AN

ECONOMIC SYSTEM

REGENCIA,REANNA CHRISTINE

ECONOMIC SYSTEM

- An economic system is a response to concrete circumstances faced by the people. Since, circumstances vary from one place to another, it follows that there is no ideal economic system.

*The best economic system is whatever suits the unique needs of a country, as long as the principles of the natural law are respected.

TYPES OF ECONOMIC SYSTEMS:

• Tradition Economy

-is based on culture and tradition.

• Command Economy

-is an economy where government plays the important role

• Market Economy

-is an economy where private individuals take their own decisions with less government intervention.

• Mixed Economy

-is a combination of both the economies-both the government as well as the private individuals take decisions.

TRADITIONAL ECONOMY

Defined in 3 characteristics:

Based on agriculture, gathering

Guided by tradition

Used of barter system instead of money

The question of what to produce is not difficult because the need of primitive society revolve mainly around the most basic items like food, clothing & shelter.

*The traditional economic system is the simplest, with no explicit rules, because the needs of the people are simple, revolving around the basic items

WHITE COLLAR MANIA• The numerous remnants of tradition in our economic system is the

choice of career. There are still a few parents who want their children to follow their professional or occupational footsteps.

• White collar is usually perform job duties in an

Office setting

Blue Collar are people who do manual labor

THE EXTENDED FAMILY

This is the practice among Filipino heads of families to consider relatives, whether close or distant to be within the sphere of their economic responsibilities.

RETAINING DESIRABLE TRADITIONS

• Extreme care and prudence must be exercised by society in deciding what to do with existing traditions. One must learn to discriminate between the desirable and the undesirable traditions

COMMAND ECONOMY

• Is one which decisions are handed down from the top authority. The orders come from an “economic commander-in-chief” or they may be proclaimed by a committee or a party, as in the case of Communist Party. The government regulates prices and wages; it may even determine what sorts of work individuals do.

MARKET ECONOMY

• An economy in which the greater part of production and distribution, is controlled by individuals and privately owned corporations rather than by the government.

THE PESO VOTES

• Problems: What to produce and What quantities to produce.

• The consumers are asked to cast their votes for different goods and services. These votes are, of course, the money that they are willing to spend.

WHAT EXACTLY ARE THESE SIGNALS THAT THE PRODUCERS WATCH?

HIGH

LOWPROFITS

MIXED ECONOMY

• Combines elements of the market and command economy. Many economic decisions are made in the market by individuals. But the government also plays a role in the allocation and distribution of resources.