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Economic Systems 4 Types. What is a system? A system is a way of doing something Economic systems allow countries to produce and distribute goods/services.

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Presentation on theme: "Economic Systems 4 Types. What is a system? A system is a way of doing something Economic systems allow countries to produce and distribute goods/services."— Presentation transcript:

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


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