Economic Storybook
Storyboard Text
- Today I will discuss the basics of economics. Each country runs their economy based on their answers to the fundamental economic questions: "What am I going to sell, how am I going to sell it, and who will I sell my goods to?"
- Each country runs one of the four types of economies. These four types are: traditional, capitalist, communist, and socialist.
- To my right is an example of a traditional economy. In a traditional economy, what will be produced, how it will be produced and for whom it will be produced is all decided by tradition. The fundamental economic questions are answered by what their ancestors did. There is little growth and development since they are not open to new ideas. Private property is not available since all property is owned by the village or tribe. There are two different methods of production in this economy: subsistence agriculture and cottage industries. Subsistence agriculture is farming only enough to feed the farmer and his family. There is rarely a surplus so there is often no additional profit. Cottage industries are groups of people or families that use their free time to work together and handcraft goods such as furniture and cloth. Examples of traditional economies are Java and Indonesia
- Behind me is an example of a capitalist, or free market, economy. In a capitalist economy, the fundamental economic questions are answered by the interaction between producers (sellers), and consumers (buyers). Anyone can produce whatever they want if it is not illegal. People have many rights in a capitalist economy. Consumers have the choice to buy a certain product over another, and their reason for this is called their incentive. Most people's incentives are lower prices. Price determines a lot in a free market. Major and minor decisions alike are often made by what the consumer thought was best for the price. Price itself is determined by the interaction between supply and demand. Supply is how much of a product there is, and demand is how much people are willing to pay for a product. When demand is high, supply is low, and when demand is low, supply is high. Producers will produce goods that are successful and popular among consumers. The two main production methods are commercial agriculture and commercial industries. Commercial agriculture is where farmers farm not just to provide for themselves, but to also sell to larger companies. Commercial industries manufacture goods in factories and sell them. In a capitalist economy, the government controls no businesses. Examples of capitalist economies are U.S.A., Germany, and Canada.
- To my left is an example of a communist, or command, economy. The fundamental economic questions are answered by the government. The government controls every aspect in the economy, so no companies are free to make what they want. People have almost no rights in a communist economy. The government will develop a 5 year plan that tells the producer what to make, how to make it, and for whom to make it. In a communist economy, everyone is paid and treated equally because the founder, Karl Marx, believed in a classless society. This type of equality causes no one to have any incentives because everyone gets the exact same thing. Workers are expected to share equality and cooperate happily. Examples of communist countries are China, Cuba, Vietnam, and North Korea
- Finally, we have a socialist, or mixed, economy. Socialist economies are also called mixed economies because they are a mix of capitalism and communism. Large companies are owned by the government while people are allowed and encouraged to own private property and small businesses. Many large decisions are made by the government. The main goal of the government is to eradicate poverty, so they often provide free essential services such as schooling, transportation, and low cost housing. Their main goal is to meet the basic needs of everyone at a very low cost. Examples of socialist economies are The Republic of India, and Pre-war Syria.
- Every country in the world falls under one of the four economies listed. without structured systems, the world would be chaotic!
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