The benefits and downfalls of different economic systems.

Economic Systems – A system of production and the exchange of goods and services, for the benefit of the citizens of the nation. A country’s economy is based on 3 questions: What to produce? How to produce it? Who to produce for? Economic Systems

Traditional Economy Examples: Tribal African villages Traditional Economy – economic system in which decisions are based on tradition and customs. Jobs are “handed down” generation to generation Little progress forward Society is “primitive” and “undeveloped”, yet stable Often rural and agricultural based Examples: Tribal African villages Inuit Native American tribes Traditional Economy

Market Economy – (Capitalism) Economic system in which decisions are based on supply and demand. Allows for maximum profit…and maximum loss. People act in the best interest of themselves. High individual freedom = limited government involvement. Examples: USA- but with limits. Turn & Talk: What could be some of the drawbacks to this economic system? What do we see in American economics? Market Economy

Command Economy (communism) – economy controlled by the government, and decides what and at what price a good is produced. Little individual economic freedom Central government allocates goods to the people Stricter governmental policy = less innovation Examples: Soviet Union (Russia)1922 – 1991 China 1949 – Present North Korea 1949 – Present Cuba 1955 – Present Command Economy

Combines elements of market AND command economies Combines elements of market AND command economies. Government and individuals share the economic decision making process. Government guides and regulates production of goods and services. Resources are owned by individuals. Government acts to protect both producers and consumers from unfair policies and practices. Examples: America is mainly a Mixed Economy, with government regulations for the good of all citizens (Environmental Protection Agency(EPA), Food and Drug Administration (FDA) etc.). Mixed Economy (Mainly)