Economic Systems There are 4 different economic systems in the world. These systems are how countries economies are run.
Before we begin we must know what supply and demand are. What is supply? What people make What is demand? What people want
Communist This is an economic system in which the government controls the factors of production. They make all decisions about use and distribution of income. The government produces the goods or provides the services itself The government owns everything!
Countries with Command Economies. Cuba North Korea Former Soviet Union
Advantages Only products that are required are produced, this prevents the production of some undesired products. Distributes wealth equally.
Disadvantages No monetary reward or incentive to become good at what you do. Limit personal freedoms of your citizens. The Government is not always the best at determining what people want. Limited supply of products.
Free Enterprise Production and distribution of goods and services are based on supply and demand. People decide what to purchase and produce and how much to charge without government intervention.
Countries with Free Enterprise systems. United States European Union/European Nations. *There is no complete free enterprise system in the world
Advantages It creates wealth. People have a choice.
Disadvantages Sometimes there is unpredictable markets.
Socialist Own many of the larger industries and provide education, health and welfare services while allowing citizens to make some economic choices.
Countries with these Germany Canada
Advantages Basic services are free. People still have choices and may run their own businesses.
Disadvantages Government has a say so in many things in your life. If the government falls, so do your basic services.
Traditional Economic system Family or Community based Economic System that relies on custom and ritual to make its choices. Examples: Aborigines Amazon Tribes Any Subsistence Economy