Economic Systems

Barter Economy No money is involved Instead goods and services are traded Usually found in less developed areas with poor economies or early in history prior to the invention of money

Market Economy (Pure CAPITALISM) Private business owners control all aspects of their company with NO intervention from the government. EX: wages and supply are set by owners Breed competition Can lead to a scenario in which owners are able to take advantage of employees, essentially “hogging” all of the wealth. Social Classes: tends to create a large gap between rich and poor.

Command Economy (Pure COMMUNISM) The government controls all businesses and companies. EX: the government chooses what wages to pay (same for all) and how much to produce. Breeds efficiency and equality Can lead to a scenario in which workers become lazy and choose not to work unless threatened with serious consequences otherwise. Social classes: no class division, everyone is supposed to be equal.

Mixed Economy (some form of SOCIALISM) Private business owners may control some businesses and the government others. If private business owners control a business, they could face restrictions (ex: required minimum wage) from the government. The amount of government role determines how “socialist” an economy will be. EX: more government control, more socialist Attempts to find the middle ground between capitalism and communism.