2 Types of Economic Systems An economic system is the term used to describe how a nation is organized for productionThere are three types of economic systems
3 1. Traditional Economic System People make goods for themselves and their familiesTheir economic roles are the same as that of their parents and grandparentsSocieties that produce goods in traditional ways still exist today in parts of South America and Asia
4 Market Economic System A system where people choose what to buy and sell and competition determines the priceThis is also known as capitalism or the free enterprise systemThe U.S. strives to have a free enterprise system
5 Command Economic System The government decides what to produceThis system exists in Cuba today
6 Four Economic Questions Every type of economic system must answer certain questionsWhat to produce?How to produce it?Who will receive it?Who owns the means of production in the economic system?But, each system answers these questions differently
7 Mixed EconomyNowhere today has an economic system that is truly 100% market or commandMost have elements of each typeFor instance the U.S. is mostly a market economy, but does have some government owned businesses and regulations which are elements of a command economy
8 Essay AssignmentList and describe the three types of economic systems. Secondly describe the four questions each economic system must answer. Finally, explain why the United States is not considered a true market economy.