introduction to macroeconomics

Economic system?

• How society uses resources to satisfy people’s needs
• An economy or economic system is the way a nation makes economic choices how the nation will use its resources to produce and distribute goods and services
• Does economic system keep on changing?
• Yes, it’s keep on changing when the society moving forward with technological changes
• How economic works ?
  
• Basically have 3 types of basic economic system:
• Traditional system

1. Centers on families
2. Decision based on customs, religion and beliefs
3. No individual decisions, all based on group decisions
4. Goods and services are produces by the family for their personal consumption.

Traditional economic system: Good or not?

Positive effects

1. Method of production, goals and roles played by each members determined by custom

Negative effects

1. All traditional and old method of production
2. Low productivity
3. Low standard of living

• Command system

1. Known as socialism or communism economies
2. All resources are belongs to the government
3. Only the government can decide what and how much to produce.

• Market economies system

1. All decision made by the market equilibrium stage
2. Producers need to plan, organize and coordinate the productions
3. Resources are allocated through individual decision making
4. People can own their business and property