Economic Systems

What is an Economy? Economy: The production and distribution of goods and services within a group of people. Production: making things Distribution: the means by which people get things Transportation and exchange Goods: Physical products Cars, Cell Phones, Computers, Food … Services: Something done by one person for another Cell phone service, Education, Babysitting…

Economic Systems An Economic System is the means by which a people produce and distribute goods and services Types of systems are: Traditional Market Command and Mixed

Traditional Economy A traditional economy is one without money. Goods and Services are exchanged through “barter” For example: “I’ll teach your kid to read if you give me that cow” Or “Give two chickens for this knife” Problem: Inefficient

Market Economy In a market economy money is used. Goods and Services are exchanged in the “marketplace” and purchased with money. How many goods and services are produced is determined by the demand for that good or service. This is also called a demand or capitalist economy. Problem: “Concentration of Wealth” The Rich get richer, the poor get poorer

Command Economy In a Command Economy the central government controls both production and distribution of goods and services. Money may or may not be used. As the economy is planned by the Gov. this is also called a “planned economy,” or communism Problem: Economies are complex, plans are imperfect As result overproduction and shortages result

Mixed Economy In a mixed economy money is used to produce and distribute goods and services Most of the economy is of the market type the government puts some controls on the economy through laws and regulation so that all (alright most) people benefit.