3 Economic Systems Market Economy Command Economy Traditional Economy.

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Presentation transcript:

3 Economic Systems Market Economy Command Economy Traditional Economy

Market Economy Individuals and businesses make economic decisions. The market prices that result from individual and business decisions act as signals to producers, telling them what buyers want.

Market Economy

Market Economy Adam Smith “Invisible hand” Laissez faire”

Command Economy Economic decisions are made largely by an authority such as a feudal lord or government agency. Planners decide what to produce.

Command Economy

Command Economy Karl Marx Communist Manifesto Countries with predominantly command economies: China, Cuba, North Korea

Traditional Economy Economic Decisions generally repeat those made in earlier times by previous generations. Continuity is valued in economic life. Most traditional type of economic activity is bartering.

Traditional Economy

Mixed Economy

Closure What Makes It A Mixed System?