Chapter 5 Key Economic Questions Society Must Answer
Capitalism Answers the Key Economic Question
Economics Internet Library
9/24/18 Please link to
use as textbook/supplement and
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I. Capitalism answers the key economic question
Unit I Review
What and how to produce,
Who receives production,
Preface: Do Economists Lie?
1. Increase Economies Growth
2. Tax Cuts Success?
3. Inflation's Back, Trouble Ahead?
4. Stocks Too High?
5. Recession Coming?
Long-Term 1. Will Inflation/Growth Tame Deficits
2. Will Debt End Capitalism
3. Job Loss to AI
4. Dollar Privilege Continuation
5. Disposition-Illegal Immigrants
6. Is Income Inequality Affecting Growth
7. Will Stagnate Income Continue
8. Russia/China U.S. Adversaries
9. Understanding China
Economics is About Reducing Scarcity
Who Will Receive Production is a Political Question
II. Market system evaluated
1. Resources allocated efficiently
2. Economic freedoms abound (freedom of enterprise and economic choice)
1. Too dependent upon competition which is often eroded by monopoly power. Waste and
inefficiency result because of monopoly power exercised by business, unions,
governments, and interest groups.
2. Inequitable distribution of income (economic survival of the fittest)
3. Market failure occurs
a. Not all costs (pollution) and benefits (public health) are properly accounted for.
b. Why? because measuring their cost and benefits in dollars is difficult and subjective.
4. Political process sometimes interferes with creative destruction.
C. Current Topics
1. Basic Characteristics of Capitalism
2. Political process sometimes interferes with creative destruction affecting efficiency
3. Modern Capitalism has many new features
4. Criticism of Modern Capitalism
Unit II. Review Efficiency and freedom must be balanced with need for regulation and income inequality.Please III. Other Economic Systems
1. Pure capitalism of Adam Smith never existed.
2. Recent economic systems are Mixed Economies Capitalism and Socialism mxed
See Democratic Capitalism vs. Capitalistic Democracy
B. Other Economic Systems
1. Socialism has some collective ownership and management of economic resources that
are more equally distributed. See History of Socialism
2. Democratic Socialism as practiced in Western Europe has public ownership of key
industries such as transportation and communication.
a. Economic systems of Europe began moving away from socialism toward capitalism
in the late 1970's.
b. Margaret Thatcher former prime minister of England started this trend.
c. Ronald Reagan agreed and stressed the market system during his presidency.
d. Capitalism and Socialism
1. Capitalism vs. Socialism Crash Course Video in World History
#33 uses humor teaching the basics.
2. Laissez fair Capitalism vs. Socialism Video See Social democracy
Editors Question: Will China's system Democratic Socialism?
3. Communism is the ideal of those practicing a "Marxian system. "
Bolsheviks wanted immediate revolution.
a. 19th century philosopher Karl Marx created the system.
b. Wealth is collectively owned and managed in this planned command economy.
c. The Paris Commune of 1871 along with the French Revolution explains why so
many feared change promised by new liberal economic systems.
d. Some equate communism with a totalitarian political system democratic
communism has never existed.
e. This very left pro-labor anti-religious economic philosophy was despised
by most Western Oligarchs many of whom preferred Nazi Fascism over
any brand of Communism.
f. Ten Questions and Answers About Americas Big Government
Unit III. Review Socialism has government
ownership and management
Some Criticize Dramatically
Some Question his motives as
16 November 1988 Click to enlarge.
One-Page Economic Issues
Political Economy Video Economic Future of Our Children
Country Issues Federal Deficit Problem Can We Afford Entitlements
Taxing the Rich Everyone is on Welfare Economically Less Dynamic States
Middle Income Stagnates Solving the Lack of Good Jobs
Income Inequality Analysis and Cures
Public Policy Affects Income Inequality
Income Inequality Exposed Are Child & Youth Protected
Prime Age Males 25-54 Work Less Political Issues Is Politics About the Money?
Look Out the Window Economics
Should Tea Party Share Its Debt Tea?
Why is Poverty Controversial?
Is the Country in Trouble? Economics Exposed International Issues Is Russia a U.S. Adversary?
Lost International Greatness
Lost Economic Greatness
Free Trade Solution or Problem
The Problem of Terrorism
Recent Terror Information
Primary Cause was Baby Boomers and Post WW2 Prosparity