1. Economic Systems
SSEF4

2. Why Economic Systems?
Nations use economic systems to determine how to use their limited resources effectively
Primary goal of an economic system is to provide people with a minimum standard of living or quality of life

3. Types of Economic Systems
Traditional Economy
Market Economy (free enterprise)
Command Economy
Mixed Economy

4. Traditional Economy Found in rural, underdeveloped countries
Vanuatu
Pygmies of Congo
Eskimos & Indian tribes
Belarus
INUIT
AMISH
Customs govern the economic decisions that are made
Farming, hunting and gathering are done the same way as the generation before

5. Traditional Economy
Men and women are given different economic roles and tasks
Advantages: people have specific roles; security in the way things are done
Disadvantages: Technology is not used; difficult to improve

6. Market Economy Also known as
Free Market Economy
Free Enterprise Economy
Businesses and consumers decide what they will produce and purchase and in what quantities
Decisions are made according to law off supply & demand
Supply and demand of goods and services determine what is produced and the price that will be charged.

7. Market Economy (Free Enterprise)
Advantage—competition to have the best products and services
Disadvantage— huge rift between wealthy and poor
Note: a true market economy does not exist…

8. Also known as a Planned or Managed Economy
Command Economy
The government (or central authority) determines what, how, and for whom goods and services are produced.
Also known as a Planned or Managed Economy

9. Command Economy Examples

10. Also known as a Planned or Managed Economy
Command Economy
Advantages
Guarantees equal standard of living for everyone
Less crime and poverty
Needs are provided for through the government
Disadvantages
Minimal choices
Fewer choices off items
No incentive to produce a better product or engage in entrepreneurship
Also known as a Planned or Managed Economy

11. Economic Systems: There are no PURE command economies There are no PURE market economies Instead there is a continuum of different characteristics

12. All economic systems are Mixed Systems
TYPE OF SYSTEM
WHO OWNS?
WHO DECIDES?
Pure Capitalism:
private ownership
the market system
Command Economy:
government ownership
centralized (or gov't) decision-making
Mixed Economy
some private and some government

13. All over the world countries are changing their economies from command economies to market economies

14. Mixed Economy Combination of a market and a command economy
Government takes care of people’s needs
Marketplace takes care of people’s wants
Most nations have a mixed economy
United States, Australia, England,

15. Mixed Economy
Advantage balance off needs and wants met by government and in marketplace
Disadvantage Citizens have to pay taxes