Chapter 2 Lesson 2 Mixed Economies Essential Question

Chapter 2 : Lesson 2 Mixed Economies

Essential Question n Why do most countries have a mixed economy?

What Do You Like on a Sundae? n n You and an elbow partner discuss it. What toppings do you like on an ice cream sundae? ¨ Plain Vanilla? ¨ Or absolutely everything (and I mean everything)?

What Do You Like on a Sundae? Chances are, you were somewhere between plain and everything. n When discussing economies, most countries are somewhere in between too. n When a country is not completely a command economy and not completely a market economy, but somewhere in between, it is called a Mixed Economy. n

Mixed Economy – “In Between”

“Pure” Command Economies If government controlled everything in the economy, then having a diversity of products would be very difficult. n With no private businesses, there would be no competition, and products would never improve. n The government could make the economy exploit the poor and benefit the rich. n

“Pure” Market Economies If an economy was pure market, people could sell anything, even things that could hurt others. n Businesses could make things cost as much as they wanted. n In order to make products cheaper, they could skimp on safety and benefits for workers. n

Most Countries Lie Somewhere in Between -However, they may be closer to one side than the other.

Weaknesses of the Free Market n n Markets leave some needs and wants unanswered (highways) Markets don’t always let everyone participate (education) Markets can’t enforce contracts or issue patents Markets can’t protect private property rights (5 th/14 th Amendments)

n Command economies exist (North Korea, Cuba) How are their Economies doing?

n Free market economies exist on the other end (Hong Kong, Singapore)

Mixed Economies with Significant Government Intervention n n Government owns some/all property and produces some/all of the goods Imports sometimes restricted/banned Foreign companies not completely welcome As a centrally planned economy transitions to a market economy it privatizes (sells to individuals) firms Examples: China, Russia

Mixed Economies with Significant Market Characteristics n n Limited government involvement in economy No/few trade barriers Open to foreign investment Examples: United States

Key Features of U. S. (Mixed) Economy n n n Free enterprise: profit motive, open opportunity, private property rights, free contract, etc. Government regulation: consumer/environmental protections (negative effects include higher bus. costs) Free trade with some protectionism Foreign investment encouraged Banks are allowed to operate relatively independently

What Type of Economy? A TGV train in Paris operated by the publicly owned SNCF. In many countries, the rail network is partly or completely, owned or controlled, by the state.

What Type of Economy? Reindeer Herding

What Type of Economy? An assembly-line worker works on the axle of a Moskvich car, made by AZLK. Enterprises in the Soviet Union were more than just places of work; they were responsible for a broad range of social welfare functions—building and maintaining housing for their workforces, and managing health, recreational, educational, and similar facilities.

Which System is Best l Does a mixed economy work best for all people/countries? l What was the United States Economy during WW 2?

Persuasive Essay: Quiz Grade Research the term scarcity. In a five-paragraph essay, define scarcity and explain why scarcity can be considered a fundamental problem in an economy. In your Essay take a position on the following statement: Scarcity is the primary driving force behind a movement away from socialist and command economies and toward a mixed economy. Give examples from the lesson to explain your answer. Essay must be in your own words: Hand in Google Classroom

Review Question: Chapter 2 : Lesson 2 Read pages 48 -53 and answer Review Questions on page 53. Hand in Google Class Room.