types of economies
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Types of economies. HW check: RB, p 59. 1 pie chart 2 bar chart 3 plan 4 flow chart 5 line chart 6 drawing / illustration 7 table 8 diagram. What is economy?. The system by which a country's goods & services are produced and used. Problem? Concerning resources and wants ... - PowerPoint PPT PresentationTRANSCRIPT
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Types of economies
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HW check: RB, p 59
• 1 pie chart
• 2 bar chart
• 3 plan
• 4 flow chart
• 5 line chart
• 6 drawing / illustration
• 7 table
• 8 diagram
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What is economy?• The system by which a country's goods &
services are produced and used.
Problem?
Concerning resources and wants...
• The resources are scarce and the wants are unlimited.
The function of economy?
• To allocate scarce resources amongst unlimited wants.
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To satisfy wants we need to answer three questions:
• What...• How...• For whom...
should be produced?
should it be produced?
should it be produced?
How these questions are answered will depend on the type of economic system.
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The three basic types of economic systems:
• Market economies(or capitalist economies or free enterprise economies)
• Planned economies(or command economies)
• Mixed economies
• Take 2 min and brainstorm words you associate with each type – make lists
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→ RB, p 17
• Read the intro
• Read the text on market economies
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Market economies
• Resources are allocated through _______ mechanism (supply and ________)
• System which stimulates _________
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Competition in market economies
• leads to lower ______ (prices),
• better ______,
• more ______ for consumers
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The role of the state in market economies:
• to _____ laws
• to provide _______ goods and services (e.g. j_ _ _ _ _ ary, national d_ _ _ _ ce, policing, fair competition)
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Imperfections of market economies
• Private firms not interested in _______ that do not make profit.
• Public interest ____________ to achieve lower costs.
• _______ distribution of income.
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→ RB, p 17
• Read the text on planned economies
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Planned economies (or command economies)
• The role of the state - ____
• The state: - organizes
- plans
- co-ordinates the whole
_________ process
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There is no competition...
• __________ goods
• Little ______ / choice for consumers
• The state _______ goods & services
• More ______ distribution of income
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In planned economies...
• Production for _____ rather than profit
• People less motivated to work _________
• The standard of living _____ than in other types of economies
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→ RB, p 17
• Read the text on mixed economies
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Mixed economies
• Some resources _________ by the state (in the _____ sector), the rest by the market system ( ______ sector)
• Public sector: responsible for _______ goods & services
• Private sector: production decisions ______ by firms (demand for gods)
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In mixed economies...
• ______ goods provided free
• The state ensures _____ competition
• Private goods & services allocated as in _____ economies.
• HW: RB, p 18
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The role of the government: MK, U 22 (p 109)
• Do governments have too much power?
Government involvement
Government intervention in the economy
Government interference
be /get involved in
intervene in
interfere in / with
Every act of government interference with business must indirectly affect consumption.
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Additional reading for the ambitious
Reasons for government intervention in the market
• http://wps.pearsoned.co.uk/ema_uk_he_sloman_econbus_3/18/4748/1215583.cw/
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Which of the following activities could be left to the private sector in Croatia?
• Education• Health care• Low-income housing• Defence• The police, the justice system, prisons• Public transport• Social security (unemployment & sickness benefits,
old age pensions)• Working conditions (working hours, child labour...)• Health, safety and cleanliness regulations
Private sector (disciplines of the maket, deregulation)
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Which of the following activities could be left to the private sector in Croatia?
• Education• Health care• Low-income housing• Defence• The police, the justice system, prisons• Public transport• Social security (unemployment & sickness benefits,
old age pensions)• Working conditions (working hours, child labour...)• Health, safety and cleanliness regulations→ RB, p 19
Private sector (disciplines of the maket, deregulation)
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RB, p 19Reading: The role of government
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HW
• Reader, p 18: do exercises I – IV• Don’t forget: Notes on RB, p 15
• MacKenzie, pp 109-110
- read the extract from the Friedmans book FREE TO CHOOSE for a different perspective on the role of government
& answer the questions
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Optional HW (for extra credit):
Prepare a short talk for next week (seminar)
(100 words: intro, body, conclusion + phrases from pp 53-54) on one of the following topics:
– a football / hockey / basketball... match– your hobby (dancing, chess, volunteering...)– why you are studying economics/business– is Kovač going to pull it off...