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Splash Screen. Chapter Focus Section 1 Capitalist and Mixed Systems Section 2 Emerging Economies Section 3 Major Economies in Transition Section 4 The Global Economy Chapter Assessment. Contents. Why It’s Important. Chapter Objectives.

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  1. Splash Screen

  2. Chapter Focus Section 1 Capitalist and Mixed Systems Section 2 Emerging Economies Section 3 Major Economies in Transition Section 4 The Global Economy Chapter Assessment Contents

  3. Why It’s Important

  4. Chapter Objectives • Capitalist and Mixed Systems Identify the factors of production in economic systems and the chief characteristics of capitalism. • Emerging Economies Discuss economic problems that have challenged developing nations and attempts to solve those problems. • Major Economies in Transition Describe the major obstacles to change in the Russian and Chinese economies. • The Global Economy Analyze the factors that dominate global economic concerns today. Chapter Objectives

  5. End of Chapter Focus

  6. Capitalist and Mixed Systems • Key Terms • scarcity, traditional economy, command economy, market economy, factors of production, entrepreneur, monopoly, profit, mixed economy • Find Out • • What are the characteristics of capitalism that differentiate it from socialism and communism? • • Why can the economy of the United States be called a mixed economy? Section 1 Introduction-1

  7. Capitalist and Mixed Systems • Understanding Concepts • Free EnterpriseWhat kinds of economic choices do individuals make in a free enterprise system? • Section Objective • Identify the factors of production in economic systems and the chief characteristics of capitalism. Section 1 Introduction-2

  8. In 1776 Adam Smith described capitalism as an economic system controlled by an “invisible hand.” According to Smith, through self interest this invisible hand moves people to decide what goods and services to produce, how to produce them, and to whom to distribute them. Adam Smith’s ideas were popularized in his book The Wealth of Nations, which was published in the same year the United States declared its independence. Section 1-1

  9. I. Factors of Production (pages 717–718) • A. The resources of an economic system are called factors of production. • B. Factors of production fall into four categories: • 1) land, • 2) labor, • 3) capital, • 4)entrepreneurs. Section 1-2

  10. I. Factors of Production (pages 717–718) Are all of the factors of production equally important in the economy? Explain. If any factor is less important, it is still essential to production. Section 1-3

  11. II. Forms of Economic Organization (page 718) • A. Three major forms of economic organization represent the range of economic systems that determine how the factors of production are allocated. • B. Communism is a command economic system. • C. Socialism is a partial command economic system. • D. Capitalism is an economic system in which individual producers and consumers make the economic decisions in free markets. Section 1-4

  12. II. Forms of Economic Organization (page 718) Section 1-5

  13. II. Forms of Economic Organization (page 718) What do you think are the advantages and disadvantages of a communist system? Explain. Answers will vary. Lack of incentives, central planning, little individual freedom. Section 1-6

  14. III. Characteristics of Capitalism (pages 718–721) • A. In the United States and several industrial countries, capitalism is the basic economic system. • B. Capitalism, also called a free enterprise system, is based on private ownership and on individual economic freedom. • C. Capitalists range from small store owners, persons who own a few shares of stock in a corporation, to industrialists who own large factories, mines, and financial institutions. • D. Capitalism encourages people to become entrepreneurs. Section 1-7

  15. III. Characteristics of Capitalism (pages 718–721) • E. Competition among sellers of products and services is another characteristic of capitalism. • F. Buyers, sellers, and workers have freedom of choice in a capitalist system. • G. The capitalist system is based on the profit motive. Section 1-8

  16. III. Characteristics of Capitalism (pages 718–721) What do you think are the advantages and disadvantages of a capitalist system? Answers will vary. Free enterprise, private ownership, individual initiative, competition. Section 1-9

  17. IV. Changing Face of Capitalism (page 721) • A. Capitalism in the United States contains some elements of a command economy. • B. Since the late 1800s, the federal government has increased its role in the economy. • C. The federal government has adopted regulatory laws to ensure competition and safety. Section 1-10

  18. IV. Changing Face of Capitalism (page 721) • D. In Japanese capitalism, the government works closely with business to limit foreign competition. In South Korea, Singapore, and Taiwan the government has a similar close relationship with business. • E. Generally, the capitalist economies of Western European nations are more controlled and regulated than that of the United States. Section 1-11

  19. IV. Changing Face of Capitalism (page 721) How might the relationship between government and business change in capitalist nations during the twenty-first century? Answers will vary. Discuss the increasing or decreasing role of government in economies. Section 1-12

  20. Checking for Understanding • 1. Main Idea Use a graphic organizer like the one below to identify five characteristics of capitalist economies. • private ownership, individual initiative, competition, freedom of choice, profit and loss Section 1 Assessment-1

  21. Checking for Understanding • A. the difference between the amount of money used to operate a business and the amount of money a business takes in • B. a condition that exists because society does not have all the resources to produce all the goods and services that everyone wants • C. a person who takes a risk to produce goods and services in search of profit • D. a business that controls so much of an industry that little or no competition exists Match the term with the correct definition. • ___ scarcity • ___ entrepreneur • ___ monopoly • ___ profit • B • C • D • A Section 1 Assessment-2

  22. Checking for Understanding • 3. Identify communism, socialism, capitalism, free enterprise system. • Communism is an economic system in which the central government directs all major economic decisions. • Socialism is an economic system in which the government owns the basic means of production, distributes the products and wages, and provides social services such as health care and welfare. • Capitalism is an economic system providing free choice and individual incentive for workers, investors, consumers, and business enterprises. • A free enterprise system is an economic system based on private ownership of the means of production and on individual economic freedom. Section 1 Assessment-3

  23. Checking for Understanding • 4. What are the three forms of economic organization that have emerged in the world? • Communism, socialism, and capitalism are the three forms of economic organization that have emerged in the world. Section 1 Assessment-4

  24. Checking for Understanding • 5. How has the U.S. government played a growing role in the nation’s economy since the late 1800s? • It has taken responsibility for the well-being of individuals and for the financial condition of the nation. It has assumed increasing responsibility for social policies. Section 1 Assessment-5

  25. Critical Thinking • 6. Making Inferences How does the free market system promote freedom of choice for consumers in the United States? • Consumers are free to choose what products they buy. Consumers may choose from a variety of sellers and products. Section 1 Assessment-6

  26. Free Enterprise One of the issues debated by advocates of a planned economy and those who support a free market economy is whether there can be democratic freedoms such as freedom of speech without having economic freedom. Write an essay explaining the connection between economic freedom and civil liberties. Section 1 Concepts in Action

  27. End of Section 1

  28. Emerging Economies • Key Terms • developing nations, newly developed nations, welfare state, nationalization • Find Out • • What are the important economic choices that developing and newly developed nations must make? • • How have economic choices affected the development of nations in Latin America and Africa? Section 2 Introduction-1

  29. Emerging Economies • Understanding Concepts • Comparative GovernmentWhat are the differences and similarities of socialist governments and communist governments? • Section Objective • Discuss economic problems that have challenged developing nations and attempts to solve those problems. Section 2 Introduction-2

  30. As many Latin American nations developed their economies, land reform turned some toward socialism. In Chile, a socialist government led by Salvador Allende began an ambitious program to break up large land holdings and redistribute land to the people. In 1973 the army overthrew Allende, established a military government, and ended land reform and socialism in Chile. Section 2-1

  31. I. Developing and Newly Developed Nations (page 772) • A.Developing nations are states with little or no industry. • B.Newly developed nations are states that have had significant or rapid industrial growth in recent years. Section 2-2

  32. I. Developing and Newly Developed Nations (page 772) Section 2-3

  33. I. Developing and Newly Developed Nations (page 772) If you were the leader of a newly developing nation, what economic model would you want to follow? Explain. Answers will vary. Discuss capitalism, socialism, or a mixed system. Section 2-4

  34. II. The Economic Choices (pages 722–724) • A. Some developing and newly developed nations rely on the free market, trade and contacts with the West to develop their economies; others rely on socialist economic models. • B. Under socialism the government only owns and controls some factors of production. • C. Socialists believe that wealth should be distributed as equally as possible. They try to achieve this goal by making basic goods and social services available to everyone. • D. Critics of socialism claim socialist policies create a welfare state. Section 2-5

  35. II. The Economic Choices (pages 722–724) Do you think government should have a major role in the economy? Why or why not? Answers will vary. Discuss advantages of specific services and regulations of government. Section 2-6

  36. III. Searching for Economic Answers (pages 724–726) • A. Socialist governments in developing and newly developed countries use more central planning than developed socialist countries do. • B. Socialist governments often take control of industries by nationalization. • C. Many developing nations, especially in Latin America, have a history of foreign-owned industries. • D. Nationalization in Latin America has been both an economic policy and a symbol of anti-colonialism. Section 2-7

  37. III. Searching for Economic Answers (pages 724–726) • E. Until recent moves toward free enterprise, Israel had a moderate socialist economy. • F. After independence, many African nations tried to develop economies based on one cash crop or one resource for trade. • G. Economic difficulties forced African countries south of the Sahara to take on $130 billion worth of debt by the 1980s. Section 2-8

  38. III. Searching for Economic Answers (pages 724–726) How do you think central planning by the government can be helpful in a developing nation? Answers will vary. See Searching for Economic Answers on text page 724. Section 2-9

  39. IV. Socialism’s Practical Problems (page 726) • A. Socialist ideology remains a popular and widely held belief in the developing world. • B. Socialism often fails to live up to its promises because capital investment is a primary need for developing economies. Failure of large-scale economic planning in Eastern Europe has raised doubts that it can work. • C. Western governments have exercised influence and pressure in favor of a combination of free markets and democracy in developing nations. Section 2-10

  40. IV. Socialism’s Practical Problems (page 726) How do you think the socialist model can be improved? Answers will vary. See Socialism’s Practical Problems on text page 726. Section 2-11

  41. Checking for Understanding • 1. Main Idea Create a graphic organizer like the one below. In the left box, identify the economic issues facing developing countries. In the right box, list policies some have adopted to promote economic progress. • Answers might include: Issues—foreign ownership of industry, how to achieve rapid industrial growth, development of cash crops for export; Policies—nationalization of industry, centralized planning, agricultural communes, acceptance of foreign aid and loans Section 2 Assessment-1

  42. Checking for Understanding • A. nations that have had significant or rapid industrial growth in recent years • B. the process by which a government takes control of industry • C. nations only beginning to develop industrially • D. a nation that has an economic system that provides many welfare programs Match the term with the correct definition. • ___ developing nations • ___ newly developed nations • ___ welfare state • ___ nationalization • C • A • D • B Section 2 Assessment-2

  43. Checking for Understanding • 3. Identify centralized planning, kibbutzim. • Centralized planning is government control of the economy. • Kibbutzim are collective agricultural communes. Section 2 Assessment-3

  44. Checking for Understanding • 4. Why have many Latin American industries been foreign-owned? • Many Latin American industries have been foreign-owned because of their colonial history or their reliance upon foreign investment. Section 2 Assessment-4

  45. Checking for Understanding • 5. What factor contributes to socialism in Africa? • Some African leaders adopted socialism because they viewed Western capitalism as another form of colonialism. Section 2 Assessment-5

  46. Critical Thinking • 6. Making Comparisons Analyze the economic choices that developing and newly developed nations must make in an increasingly interdependent global economy. • Developing nations may seek to industrialize as rapidly as possible, whereas newly developed nations may seek to sustain their rate of growth and influence the world economy. Section 2 Assessment-6

  47. Comparative Government Review the characteristics of economies under socialist governments and under communist governments. Create an organizational chart that illustrates decision making under each of these types of government. Section 2 Concepts in Action

  48. End of Section 2

  49. Major Economies in Transition • Key Terms • state farm, collective farm, gross national product • Find Out • • How did economic problems lead to the collapse of the Soviet Union? • • What are some of the obstacles to change faced by Russia? Section 3 Introduction-1

  50. Major Economies in Transition • Understanding Concepts • Comparative GovernmentHow did the Communist Party control the government and economy of the Soviet Union? • Section Objective • Describe the major obstacles to change in the Russian and Chinese economies. Section 3 Introduction-2

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