1. Economic Systems
4 Types

2. What is a system? A system is a way of doing something
Economic systems allow countries to produce and distribute goods/services based on their goals

3. Traditional System
This type of economy relies on habit or custom to answer the 3 questions of allocation (what, for whom, how to produce)
Everything is done just the way it was in the past, there is little room for change

4. Market System
In this type of economy, decisions are made by individual consumers and producers – they decide how to answer the 3 questions by using voluntary trade
Another name for this system is capitalism

5. Command System
In this economy the central, or main, government decides how to answer the 3 questions for everyone
The government tends to own most of the resources and controls labor by determining where people are allowed to work and how much they are paid

6. Types of Command Economies
Socialism: refers to the idea that fair means are used to distribute wealth equally; the government owns key utilities but the people elect the government via democratic elections
Communism: believes that all economic and political power rests in the hands of the government and that change can only come about through violent revolution. Governments are authoritarian – strict obedience to the government is mandated or severe punishments will follow

7. Mixed System
This type of economy is a combination of the market and command systems
Most economies today are mixed and have more market tendencies but some command tendencies as the government has some decision making power