The Companion to The Little Book On Line
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P: Economic Systems
Learning Outcome #8: Identify major economic systems: capitalism, socialism, communism.
Directions, Part A: Carefully read and study Section P under Important Things to Remember and Related Words in The Little Book. Then, read the characteristics below and decide to which economic system each belongs. In the space provided, write "cap" for capitalism, "soc" for socialism, or "com" for communism.
- ____ value cooperation and sharing the work
- ____ value competition and hard work
- ____ public and private ownership of the means of production
- ____ public ownership of the means of production
- ____ price of goods and services are determined by government
- ____ price of goods and services are determined by the marketplace
- ____ type of goods and services produced are determined by the government
- ____ quantity of goods and services produced determined by the marketplace
- ____ quantity of goods and services produced determined by the government and the marketplace
- ____ government plays an active role in the economy to insure economic strength and social justice
- ____ eventually government will not be necessary
- ____ government should avoid interfering in the economy
- ____ individuals and groups can start their own businesses
- ____ government ownership of all businesses
- ____ businesses operated for the benefit of the people
- ____ businesses operated by owners and investors who take risks in search of profits
- ____ the economic system of most nations of the world
- ____ the economic system of the United States
Directions, Part B: Below are some concrete examples of situations that occur under different economic systems. Look at the illustration and read the sentences that follow. Then, determine which economic system--capitalism, socialism, or communism--would most likely produce such a situation. Be prepared to defend your choice.
- A farmer owns two cows and sells the milk to a government-owned dairy.
- A farmer owns two cows and can sell the milk to any dairy.
- A farmer is assigned two cows and a share of grazing land. All milk is sent to a government-owned dairy.
- The farmer decides to sell the milk at his roadside stand.
- The government sets the price of the farmer's milk.
- The price of the farmer's milk is determined by the amount of milk produced and the total amount people want to buy.
- The government determines the number of gallons of milk it wants each year and gives production goals to farmers.
- People buy the farmer's milk from a privately-owned store.
- People buy the farmer's milk from a government-owned store.
- People can shop around and buy milk from the store with the lowest price.
- Because of a terrible milk shortage, the government takes control of the dairy industry and sets milk prices.
- The farmer decides to sell one cow and use the money to buy a bull for the purpose of breeding more cows.
(adapted from the Citizenship Instruction Program, Cleveland Board of Education, 1992)
Directions, Part C: Read the multiple choice questions below carefully. Identify the economic system described by finding the key terms and phrases that characterize capitalism, socialism, and communism. Be prepared to defend your answer.
- The military takes over the country of Bom. The new leaders take ownership of all energy resources, which include the natural gas and electric companies. They promise citizens of Bom lower energy prices, because the government will run these industries for the benefit of the people and not for profit. All other industries will remain privately owned. What type of economic system does Bom have?a. capitalism
- The government of Bom takes ownership of all industries. The citizens are promised businesses will be run for people, not for profit. Every adult is guaranteed a job. The government sets prices on goods and services. No one will be hungry or homeless. What type of economic system does Bom have?a. capitalism
- Shortages of food and other products appear in Bom. Prices increase, but wages stay the same. Elections are held and new leaders are chosen. These leaders promise to return business and industry to private ownership. They encourage new businesses and promise opportunity for big profits for owners and investors. Less government involvement in the economy and competition produce more goods and services at lower prices. What type of economic system does Bom have?a. capitalism
- As businesses and industries of Bom become privately owned, many people lose their jobs. More goods and services are available and prices fall, but people can't afford to buy much. Elections are held and new leaders are chosen. The new leaders take control of the largest and most important businesses and hire people. They also hire people for public service jobs such as sweeping streets and repairing public buildings. What type of economic system does Bom have?a. capitalism
- Why was answer "b" always wrong in the questions above?
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