Economic Systems

Traditional Economy All economic decisions are based on customs, traditions, and beliefs of the past. People will make what they always made and do the same things their parents did. The exchange of goods is done through bartering. Bartering: trading without using money Examples: villages in Africa and South America, the Inuit in Canada, Aborigines in Australia This Photo by Unknown Author is licensed under CC BY

Traditional Economy What goods/ services are produced? What ancestors made How will goods/services be produced? How your ancestors made them Who will consume the goods/services? Your family and people in the village who need them through bartering

Command Economy All Economic decisions are made by the government. The government owns most of the property, sets the prices of goods, determines the wages of workers, plans what will be made… everything. There is very little input from the people. Examples: Cuba, former Soviet Union, North Korea All of these governments are Communist. The government is in control of everything!

Command Economy What goods/ services are produced? Government decides what will be produced How will goods/services be produced? Government decides how to make them Who will consume the goods/services? Whoever the government decides to give them to

Market Economy Consumers and businesses dictate what is produced, how much is produced, and how much things cost. The government has no control over the economy. Nothing is illegal to sell! No laws to make sure food/medicines are safe. No laws to protect workers. Etc. There is a lot of competition. Examples: Canada, South Korea, Germany, Great Britain, and the UNITED STATES!

Market Economy What goods/services will be produced? What consumers want/need How will goods/services be produced? By businesses owed by citizens based on demand Who will consume the goods/services? Consumers who can afford to pay

Economic Continuum