WHAT IS AN ECONOMIC SYSTEM?

Economic System How the government and businesses work to provide goods and services to consumers Three Economic Questions 1.What goods and service should be produced? 2.How should they be produced? 3.For whom should the goods and services be produced?

Three Types of Systems 1.Pure Command 2.Pure Market 3.Modern Mixed

Pure Command Economy Government lead Government controls economic decision- making Government provides the answers to all three economic questions Example: communist country

Pure Market Economy Buyers and sellers direct the economic system Market decides answers to three economic questions Also called a free market, free enterprise or capitalist system

What’s Free about “Free Enterprise” Business is free to establish place of operation Consumers are free to buy goods and services when and where they choose Freedom to own private property Freedom of choice Produce any product or service you choose

Modern Mixed Economy No economic system acts in a pure form Contain elements of both What System Does Canada Have? Primarily a market, includes aspects of command system Market Economy Command Economy USACanadaSweden North Korea