2 Types of Economic Systems: TraditionalEconomyMarketEconomyCommandEconomyMixedEconomy
3 Economic SystemsEconomic Systems – method used by a society to produce and distribute goods and services
4 Types of Economic Systems: Traditional Economy– relies on habit, custom, or ritual to decide questions of production and consumption of goods and serviceslittle room for innovation or changerevolves around the family
5 Types of Economic Systems: Market Economy– decisions on production and consumption of goods and services are based on voluntary exchangechoices are made by individuals
6 Types of Economic Systems: Command Economy– a central authority is in command of the economycentral government makes all the decisions
7 Types of Economic Systems: Mixed Economy– market-based economic system in which the government plays a limited rolemost modern economies!!
8 Comparing Mixed Economies An economic system that permits the conduct of business with minimal government intervention is called free enterprise. The degree of government involvement in the economy varies among nations.Continuum of Mixed EconomiesCentrally plannedFree marketSource: 1999 Index of Economic Freedom, Bryan T. Johnson, Kim R. Holmes, and Melanie KirkpatrickIranNorth KoreaCubaChinaRussiaGreecePeruUnited StatesSouth AfricaFranceUnited KingdomBotswanaCanadaSingaporeHong Kong
9 Countries Economic Systems: TraditionalMarketMixedCommandInuitSingaporeHong KongUnited StatesUnited KingdomCanadaIranCubaNorth Korea
10 3 Economic ?s WHAT goods and services should be produced? TraditionalEconomyMarketEconomyCommandEconomyMixedEconomy3 Economic ?sWHAT goods and services should be produced?HOW should these goods and services be produced?FOR WHOM should these goods and services be produced?