World Economic Systems

Factors of Production These are the three fundamental questions that determines the economic system: 1. What should be produced? 2. How should and how much should be produced? 3. Who should get it and at what cost?

Traditional Economy Also known as subsistence economy. Nearly all goods and services are produced by the people are consumed in their own nation within families and villages.

Market Economy Also known as free enterprise. Private individuals and private groups decide and control what goods are produced, how many goods are produced, and what they cost. This is determined by the law of supply and demand. An example of this economy is capitalism. Gov’t plays little or no role in this type of economy.

Command Economy Economy is controlled by a single, central gov’t. All economic decisions are made by the gov’t. Communism is the best example of this type of economy. Gov’t planners decide what is produced, how many will be produced, and its cost.

Mixed Economy An economic system that has two or more different characteristics from the previous economic types. An example is socialism…designed to be equal with gov’t regulations and private groups and individuals controlling economic decisions.

Economic Spectrum