Historia De Honduras

Ch 2 Sec 3 “Centrally Planned Economies”
Centrally Planned Economy the key economic questions are not answered by the market, but are instead controlled by the government socialism the central government controls the means of production and answers the economic questions, but does so democratically (with the consent of the governed). communism centrally planned economy where the people have nochoice but to follow the will of the authoritarian government

Ch 2 Sec 4 “Modern Economies”
laissez faire (let it be) belief that the government should not interfere at all
with business and that the market place will regulate itself

mixed economy having a capitalist (free market) economy with some
regulation and involvement of the government (taxes, spending, education)

United StatesEconomy close to a free market system, yet the
government does sometimes influence the answers to the three economic questions
SECTION 1

Centrally Planned Economies
• How are centrally planned economies organized? • How did the centrally planned economy of the former Soviet Union function? • What problems exist within centrally planned economies?

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Main MenuOrganization of Centrally Planned Economies
In a centrally planned economy, the government owns both land and capital. The government decides what to produce, how much to produce, and how much to charge.
Socialism is a social and political philosophy based on the belief that democratic means should be used to distribute wealth evenly throughout a society. Communism is a political systemcharacterized by a centrally planned economy with all economic and political power resting in the hands of the government.

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The Former Soviet Union
• Soviet Agriculture – In the Soviet Union, the government created large state-owned farms and collectives for most of the country’s agricultural production. • Soviet Industry – Soviet planners favored heavy-industryproduction (such as steel and machinery), over the production of consumer goods. • Soviet Consumers – Consumer goods in the Soviet Union were scarce and usually of poor quality.

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Problems of a Centrally Planned Economy

Centrally planned economies face problems of poorquality goods, shortages, and diminishing production.
Chapter 2 Section Main Menu

ModernEconomies
• Why are many modern economies mixed economies? • What role does the government play in a mixed economy? • How do mixed economies in different countries compare? • What role does free enterprise play in the United States economy?

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The Rise of Mixed Economies
Market economies, with all their advantages, have certain drawbacks. Limits of LaissezFaire
Laissez faire is the doctrine that government generally should not interfere in the marketplace. Governments create laws protecting property rights and enforcing contracts. They also encourage innovation through patent laws.

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Government’s Role in a Mixed Economy
In a mixed economy, • • PRODUCT MARKET The government collects monetary taxes on productsthat households purchase from firms The government expenditures includes purchasing physical products produced by firms with the taxes collected from households
Households

Circular Flow Diagram of a Mixed Economy

Product market
monetary flow physical flow

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t en m ses rn a ve rch gopu

•

Government

expenditures

Firms

physical flow monetary flow

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Government’s Role in a Mixed Economy
In a mixed economy, • • FACTOR (Resource) MARKET The government collects monetary taxes on income that households earn from firms
Households
expenditures

Circular Flow Diagram of a Mixed Economy

Government

Firms

•

The government expenditures includes purchasing physical resources provided by households with the...