Presentation on theme: "The way a group of people produce and distribute goods and services."— Presentation transcript:
1 The way a group of people produce and distribute goods and services. Economic SystemsThe way a group of people produce and distribute goods and services.
2 4 Types of Economic Systems CommandTraditionalMarketMixed
3 Traditional Economy Definition Characteristics Examples When people grow or make their own goodsCharacteristicsFound in developing countriesUse of Barter System (Trade goods for goods)Production & Distribution of goods/services is based oncustoms and traditions of society.Based on how things were done in the past.ExamplesFound in remote Rural areas (Congo/Amish)Found in many developing countries
4 Command ECONOMY Definition: Gov’t makes all economic decisions and controls everythingCharacteristics:No competitionGovernment determinesFor Whom, how and what products will be madePrices of productsPeople are not free to choose what to buy orsell
5 Command ECONOMY Con’t Examples: Communism – economic system in which the central government directs all major economic decisions.Socialism – Government has some controls over basic means of production the rest are privately owned and operated.
6 Command ECONOMY Con’t Role of Government Make all decisions about what is produced and who gets it
7 Market ECONOMY Definition: Characteristics: People are free to obtain goods and services in any way they wantCharacteristics:Competition existsNO Government Interference (Laissez-Faire)Consumers are NOT protected by unfair business practices such as monopolies.Goods are produced to meet public demand (supply & demand).Private businesses produce goods for profit
8 Market ECONOMY Con’t Examples: Capitalism– Economic decisions for production are made by people and are based on profit motive.No current nation has a true market economy
9 Market ECONOMY Con’t Role of Government In a true market economy, Government has very little or no involvement; it does not regulate business, nor does it protect consumers
10 Mixed ECONOMY Definition: Characteristics: Relies on a combination of all the other three economic systemsCharacteristics:People CHOOSE what they buy and sell.Competition is encouraged.Government regulates business to protect consumersSupply & demand dictate what are producedSellers motivated by profit
11 MIXED Economy Con’t Examples: Capitalism United States Most of the countries in the world have some sort of mixed economy
12 MIXED Economy Con’t Role of Government In a mixed economy, Government sets up regulations in order to protect consumers (break up monopolies; establish minimum wage; create laws to limit pollution, etc…)