Unit 8: Economic Systems and Decision-Making
Different economic systems shape how societies organize production, distribution, and consumption of goods and services. Capitalism, socialism, and mixed economies each have distinct characteristics, advantages, and disadvantages that influence decision-making and resource allocation. Market structures impact efficiency and competition, while government intervention and fiscal policies are critical for correcting market failures and promoting economic stability. Global trade and economic interdependence have transformed how countries interact economically, highlighting the need for cooperation to address challenges.
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What we have learnt
- Economic systems dictate how resources are allocated and economic decisions are made.
- Different market structures influence the efficiency of resource allocation and can lead to varying levels of competition.
- Government intervention is essential to correct market failures and achieve economic stability.
- Global trade enhances economic interdependence, requiring countries to cooperate for mutual benefit.
Key Concepts
- -- Capitalism
- An economic system where private individuals own capital goods, and production is dictated by free markets.
- -- Socialism
- An economic system where the state owns production means and makes all economic decisions.
- -- Mixed Economy
- An economic system combining elements of capitalism and socialism with both private and public sector involvement.
- -- Market Structure
- The organization and characteristics of a market that influence competition and pricing.
- -- Fiscal Policy
- Government spending and taxation policies aimed at influencing economic activity.
- -- Economic Interdependence
- The interconnectedness of modern economies where changes in one affect others through trade and finance.
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