Comparative Economic Systems

Transcription

1 Economics

2 Comparative Economic Systems Students research the economic systems of a communist country and a third-world country and compare them to the US, guided by questions and using information from the CIA World Factbook website. KEY CONCEPTS Economic Systems STUDENTS WILL Define market economies, command economies, and developing economies. Compare one country with another by reference to factors associated with economic performance. INTRODUCTION What would life be like in the North Korean economy? How would things be different in the economy of Chad? In this lesson, you will have the opportunity to compare these two economies to the U.S. economy, and you ll practice using some tools that can help you to study any economy in the world. RESOURCES CIA Factbook: The CIA updates its World Factbook website annually. Data are included for every country in the world, as well as several territories of other nations. Students will use this website to fill out their Comparative System Worksheets. Comparative Systems Worksheet : Click on the link and print the chart, to fill in the information from each of the countries. Comparative Systems Worksheet

3 PROCESS First we need to take a moment to look at how economists categorize economies. A market economy is characterized by private ownership of the means of production (for example, farms and factories), and supply and demand are responsible for the price and allocation decisions. The United States, Hong Kong, and Germany are considered market economies. A command economy is characterized by government (or central) control ownership of the means of production, and with a central authority setting prices of goods and services and for most allocation decisions. North Korea and Cuba are command, or more specifically communist, economies. A developing economy is one which is not yet industrialized, but is developing. Chad, Ecuador, and Bangladesh are considered developing nations. In this lesson, you will compare several aspects of the economies of the United States (representing a market-oriented economy), North Korea (representing a command economy), and Chad (representing a developing economy). Print the Comparative Systems Worksheet. Go to the CIA World Factbook website to find the information needed to complete the chart. Use the information from the worksheet to consider the following seven questions. 1. How can the presence or absence of natural resources and arable land affect a nation s economy, regardless of the type of economic system? [If a country has few natural resources and little land available for crops, it may not be able to produce enough food and products for the people.] 2. How can life expectancy and literacy rates affect the quality of labor in the economy? [A shorter life expectancy may indicate poor medical care, and lower literacy rates may indicate poor education, both of which can have negative impacts on production.] 3. How can fertility rates affect the use of scarce resources? [High fertility rates, especially in countries with few natural resources and lower GDPs, may indicate serious strains on scarce resources.] 4. How can GDP per capita and poverty rates indicate standards of living in each system? [They can indicate standards of living in each system because GDP per capita is generally lower, and poverty rates are generally higher, in countries with lower standards of living.] 5. How can the size of the industrial/service sector and the agriculture employment rate indicate the level of industrialization?[a larger industrial and service sector, and a larger number of people working outside of agriculture, can indicate a higher level of industrialization in the economy.] 6. How can electricity, communication, and transportation facilities indicate the potential for industrial growth? [Greater electrical generation capacity, greater use of telephones and the Internet, and a greater availability of transportation via rail, highway, and airline can indicate a greater potential for increased industrialization.] 7. Considering the lack of natural resources, the labor problems, and the lack of capital and little industrialization of developing countries, how can developing countries develop? (Hint: Look at Economy - Overview for Chad). [Developing countries can develop by infusion of funds and capital from other nations, the World Bank, the International Monetary Fund, and regional and humanitarian organizations.]

4 CONCLUSION Market-oriented and command nations tend to place different priorities on the role of government in the economy, with the government sector generally playing a larger role in command nations. Given their resources, market-oriented and command nations can choose to focus on increased industrialization and expansion into new markets. Developing nations, however, often lack resources necessary for industrialization and must seek aid or investment from industrialized economies in order to grow. With increased globalization, we are becoming more acutely aware of the interdependence of all nations in our world economy. ASSESSMENT ACTIVITY Now that you have studied the economic characteristics of these three countries, define the terms market-oriented, command, and developing economy in your own words. For each term, describe the specific characteristics of the countries you studied that would help to support your definition. [Market economies rely on private ownership of the means of production and supply and demand to determine prices and output. The US meets this definition, indicated by a lower amount of government and military spending as a percentage of GDP than North Korea does. Command economies feature government ownership of the means of production, and centralized planning of the economy. North Korea fits this definition with its high government and military spending as a percentage of GDP and its extensive use of government boards to determine economic production. Third world economies are not yet industrialized, but are developing. Chad is an example of this definition, characterized by low GDP, high poverty, little industrial employment, and poor energy, communication, and transportation systems.] Try this same exercise, comparing the economic systems of nations large and small, industrialized and developing, well-known and little-known. Consider looking at the differences in the former Soviet republics and Eastern Europe, which are converting from command to socialist or market-oriented systems. Prepare a grid similar to that on the Comparative Systems Worksheet, illustrating the most important points of comparison between the nations you have selected to study. Source:

5 Economics Unit: Microeconomics/Supply & Demand 2A 2B 2C 7A 7B 9A 9B understand the effect of changes in price on the quantity demanded and quantity supplied identify the non-price determinants that create changes in supply and demand, which result in a new equilibrium price interpret a supply-and-demand graph using supply-and-demand schedules analyze the costs and benefits of the purchase, use, or disposal of personal and business property identify and evaluate examples of restrictions that the government places on the use of business and individual property describe characteristics and give examples of pure competition, monopolistic competition, oligopoly, and monopoly (CCRS I.D2) identify and evaluate ordinances and regulations that apply to the establishment and operation of various types of businesses

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7 Economics Sample Assessment Items for Analysis What is required for an economy producing on the curve at Point B to produce more clothing? A get additional resources B acquire new technology C produce less food D hire more workers Easy- Difficult DOK Learned v. Taught Which of the following best completes the graphic organizer? F Problems of command economies G Benefits of the free enterprise system H Solutions to reducing government debt J Arguments for expanded government regulation Easy- Difficult DOK Learned v. Taught Which characteristic of the U.S. free enterprise system creates the incentive to work, save, and invest? A Social Security system B voluntary exchanges C private property ownership D consumer sovereignty Easy- Difficult DOK Learned v. Taught Mary does not like to make choices. She likes to be told what is expected of her. She really does not like it when others have more than she has. She thinks everyone should be rewarded equally. People with values like Mary's are happiest living in and maintaining which type of economic system? F communist G socialist H utopian J free enterprise Easy- Difficult DOK Learned v. Taught U. S. Economic Policies' Costs and Benefits Lower Interest Rates Economic Growth Which of the following BEST completes the flow chart? F less capital G fewer smaller businesses H lower taxes J higher employment Easy- Difficult DOK Learned v. Taught

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9 TEKS for Economics Category Readiness Standards Supporting Standards Economics 1(A) explain why scarcity and choice are basic economic problems faced by every society; (CCRS I.D2) 2(A) understand the effect of changes in price on the quantity demanded and quantity supplied; * 2(B) identify the non-price determinants that create changes in supply and demand, which result in a new equilibrium price; 3(A) explain the concepts of absolute and comparative advantages; (CCRS I.D2) 3(B) apply the concept of comparative advantage to explain why and how countries trade; (CCRS I.D2) 4(A) compare the effects of free trade and trade barriers on economic activities; (CCRS I.D2) 4(B) evaluate the benefits and costs of participation in international freetrade agreements; (CCRS I.D2) 4(C) analyze the effects of changes in exchange rates on imports and exports. (CCRS I.D2) 5(A) describe the basic characteristics of economic systems, including property rights, incentives, economic freedom, competition, and the role of government; (CCRS I.D2) 5(B) compare the free enterprise system, socialism, and communism using the basic characteristics of economic systems; (CCRS I.D2) 5(C) examine current examples of free enterprise, socialist, and communist economic systems; (CCRS I.D2) * 5(D) understand that the terms free enterprise, free market, and capitalism are synonymous terms to describe the U.S. economic system; (CCRS I.D2) * 6(A) explain the basic characteristics of the U.S. free enterprise system, including private property, incentives, economic freedom, competition, and the limited role of government; (CCRS I.D1) 6(B) explain the benefits of the U.S. free enterprise system, including individual freedom of consumers and producers, variety of goods, responsive prices, investment opportunities, and the creation of wealth; (CCRS I.D1) 6(D) analyze the costs and benefits of U.S. economic policies related to the economic goals of economic growth, stability, full employment, freedom, security, equity (equal opportunity versus equal outcome), and efficiency. (CCRS I.D1) * 8(A) interpret the roles of resource owners and firms in a circular-flow model of the economy and provide real-world examples to illustrate elements of the model; (CCRS I.D2) 9(A) describe characteristics and give examples of pure competition, monopolistic competition, oligopoly, and monopoly; (CCRS I.D2) 10(A) interpret economic data, including unemployment rate, gross domestic product, gross domestic product per capita as a measure of national wealth, and rate of inflation; (CCRS III.B3) * 12(B) describe the characteristics of money, including commodity money, fiat money, and representative money; (CCRS I.D1) * 12(C) examine the positive and negative aspects of barter, currency, credit cards, and debit cards. (CCRS I.D1) * 13(A) explain the structure of the Federal Reserve System; 14(B) describe the role of government in the U.S. free enterprise system and the changes in that role over time; 15(C) analyze the impact of fiscal policy decisions on the economy. 1(B) describe how societies answer the basic economic questions; 1(C) describe the economic factors of production; 1(D) interpret a production-possibilities curve and explain the concepts of opportunity costs and scarcity. 2(C) interpret a supply-and-demand graph using supply-and-demand schedules. 5(E) analyze the importance of various economic philosophers, including Friedrich Hayek, Milton Friedman, John Maynard Keynes, and Adam Smith, and their impact on the U.S. free enterprise system. 6(C) analyze recent changes in the basic characteristics of the U.S. economy * 7(A) analyze the costs and benefits of the purchase, use, or disposal of personal and business property; 7(B) identify and evaluate examples of restrictions that the government places on the use of business and individual property. 8(B) explain how government actions affect the circular-flow model; and 8(C) explain how the circular-flow model is affected by the rest of the world * 9(B) identify and evaluate ordinances and regulations that apply to the establishment and operation of various types of businesses. 10(B) analyze business cycles using key economic indicators. 11(A) analyze how productivity relates to growth; * 11(B) analyze how technology relates to growth; 11(C) analyze how trade relates to growth. * 12(A) describe the functions of money; * 13(B) analyze the three basic tools used to implement U.S. monetary policy, including reserve requirements, the discount rate and the federal funds rate target, and open-market operations; 13(C) explain how the actions of the Federal Reserve System affect the nation's money supply; * 13(D) analyze the decline in value of the U.S. dollar, including the abandonment of the gold standard. * 14(A) identify economic concepts in the U.S. Constitution, including property rights and taxation; * 14(C) evaluate government rules and regulations in the U.S. free enterprise system. 15(A) identify types of taxes at the local, state, and national levels and the economic importance of each; 15(B) analyze the categories of revenues and expenditures in the U.S. federal budget; * indicates new standards NOTE: The classification of standards on this snapshot represent the reviewed and synthesized input of a sample of Social Studies Educators. This snapshot DOES NOT represent a publication of the Texas Education Agency. District curriculum may reflect other classifications. Revised September 2012.

10 Personal Financial Literacy 16(A) explain the characteristics of sole proprietorships, partnerships, and corporations; 16(D) explain how corporations raise money through stocks and bonds. * 17(A) explain the functions of financial institutions and how they affect households and businesses; 17(D) examine the types of accounts available to consumers from financial institutions and the risks, monetary costs, and benefits of maintaining these accounts. 16(B) analyze the advantages and disadvantages of sole proprietorships, partnerships, and corporations; 16(C) analyze the economic rights and responsibilities of businesses, including those involved in starting a small business; 17(B) explain how the amount of savings in an economy is the basis of capital formation; * 17(C) analyze the role of interest and risk in allocating savings to its most productive use; 18(A) assess ways to be a wise investor in the stock market and in other personal investment options; 18(B) explain how to begin a savings program; 18(C) examine investment options available in a personal retirement plan; 18(D) demonstrate how to maintain a checking account, including reconciling a bank statement; 18(E) identify the types of loans available to consumers; 18(F) explain the responsibilities and obligations of borrowing money; and 18(G) develop strategies to become a low-risk borrower by improving one's personal credit score. 19(A) examine ways to avoid and eliminate credit card debt; 19(B) evaluate the costs and benefits of declaring personal bankruptcy; 19(C) evaluate the costs and benefits of buying insurance; 19(D) evaluate the costs and benefits of charitable giving. 20(A) evaluate the costs and benefits of renting a home; 20(B) evaluate the costs and benefits of buying a home; 20(C) assess the financial aspects of making the transition from renting to home ownership. 21(A) understand how to complete the Free Application for Federal Student Aid (FAFSA) provided by the United States Department of Education; 21(B) research and evaluate various scholarship opportunities such as those from state governments, schools, employers, individuals, private companies, nonprofits, and professional organizations; 21(C) analyze and compare student grant options; 21(D) analyze and compare student loan options, including private and federal loans; 21(E) research and evaluate various work-study program opportunities; and 21(F) investigate nontraditional methods of paying for college or postsecondary education and training. Social Studies Skills Process Standards 22(A) analyze economic information by sequencing, categorizing, identifying cause-and-effect relationships, comparing, contrasting, finding the main idea, summarizing, making generalizations and predictions, and drawing inferences and conclusions; 22(B) create economic models, including production-possibilities curves, circular-flow charts, and supply-and-demand graphs, to analyze economic concepts or issues; 22(C) explain a point of view on an economic issue; 22(D) analyze and evaluate the validity of economic information from primary and secondary sources for bias, propaganda, point of view, and frame of reference; 22(E) evaluate economic data using charts, tables, graphs, and maps; and 22(F) use appropriate mathematical skills to interpret economic information. 23(A) use economic-related terminology correctly; 23(B) use standard grammar, spelling, sentence structure, and punctuation; 23(C) transfer information from one medium to another, including written to visual and statistical to written or visual, using computer software as appropriate; 23(D) create written, oral, and visual presentations of economic information; and 23(E) attribute ideas and information to source materials and authors. 24(A) use a problem-solving process to identify a problem, gather information, list and consider options, consider advantages and disadvantages, choose and implement a solution, and evaluate the effectiveness of the solution; and 24(B) use a decision-making process to identify a situation that requires a decision, gather information, identify options, predict consequences, and take action to implement a decision. Sources: The provisions of this adopted to be effective August 23, 2010, 35 TexReg 7406; amended to be effective March 7, 2012, 37 TexReg and Texas College and Career Readiness Standards (CCRS) * indicates new standards NOTE: The classification of standards on this snapshot represent the reviewed and synthesized input of a sample of Social Studies Educators. This snapshot DOES NOT represent a publication of the Texas Education Agency. District curriculum may reflect other classifications. Revised September 2012.