Economic Systems. Combines elements of both free market enterprise & government intervention Planned economy Government determines price of goods & services,

Economic Systems

Combines elements of both free market enterprise & government intervention

Planned economy•Government determinesprice of goods & services,and supply

•Price of goods & services dictated by the market

• many countries operate under a mixed economy• In Canada, certain elements are overseen by the

government such as the military or postal service, while allowing other elements to be controlled by a free market such as the fluctuating cost of gas

How big of a role should the government have in mixed economies?

Economic Liberalism•Adam Smith•No government interference or intervention

a.k.a “Progressive Thought”

• John Maynard Keynes proposed that the government has a role to play during difficult economic times i.e. The Great Depression

• can stimulate the economy by increasing spending during periods of high unemployment, which

• would provide jobs for people; consequently, with higher employment, the economy would

• improve as people would have income to spend on goods and services

• popular in the developed world till the 1980s, “replaced” byNeo-liberalism– a return to freer market economy and reduced role for the government

Keynesian Economics

• Economic globalization: the easy movement of goods, productions, capital and resources among countries

• Elimination of barriers to trade i.e. European Union, North American Free Trade Agreement

Pros & Cons• elimination of trade barriers = economic development

for periphery• no barriers = market for products, cheap labour, profit

for transnational corporations (sweatshops)• less gov’t intervention = no social support i.e.

Homelessness

Impacts of Neo-Liberal Policies

Balance? Government subsidies to farmers = protection from free market