1. Types of Economy
August 6, 2014

2. Economic Systems There are 3 types of economic systems.
They all have different ways of answering the following 3 questions…
What to produce?
How to produce?
For whom to produce?

3. Market Economy
An economic system in which business owners and consumers (people who buy stuff) make decisions about what to make, sell, or buy.
To answer the 3 economic questions…
What to produce? – the people decide
How to produce? – the people decide
For whom to produce? – the people decide

4. Command Economy
An economy in which the government owns most of the industries and makes most of the economic decisions.
To answer the 3 economic questions:
What to produce? – the government decides
How to produce? – the government decides
For whom to produce? – the government decides

5. Traditional Economy
The exchange of goods or services based on custom and tradition
To answer the 3 economic questions:
What to produce? – it is decided by generations in the past
How to produce? – it is decided by generations in the past
For whom to produce? – typically for the members of the family or village

6. Mixed Economy
An exchange of goods or services based on at least two other types of economic systems.
In other words, it mixes command and market, or traditional and market, or command and traditional, etc.
Most countries in the world have an economy that is somewhere between a pure market and pure command economy

7. Countries we’ll be studying this year…
South Africa: mixed economy between market and command, trying to move towards a more market-oriented economy. Abundant supply of natural resources, including the largest gold mining industry in the world.
Nigeria: former command economy that is beginning the transition to market. Struggling to diversify their economy and move away from focusing solely on oil drilling.
Israel: market economy with a well-educated workforce. People typically work in technology or manufacturing.

8. Countries, cont’d…
Saudi Arabia: Autocratic governments typically have a command economy, and Saudi Arabia is no different. The government has strong control of the largest industry – oil. They are, however, trying to encourage growth in other areas, including telecommunications (phones, TV, radio)
Turkey: mostly market, with large agriculture and manufacturing (textiles, automotive) sectors

9. And, still more countries…
China: former command economy, that has moved toward a market in the last 40 years. World’s largest exporter of some agriculture products and some manufactured products, including apparel (clothing).
India: another former command economy that is mostly market now. Very large, diverse economy, with traditional agriculture and software representing two large parts.

10. But, wait! There’s more!
Japan: market economy that is one of the world’s largest producers of cars. Must import most agricultural products as well as oil and natural gas due to the small size of the country and very little farmable land.
North Korea: A strong communist government rules this country which equates to a strong, highly-controlled command economy. They allow very little outside influence from other countries and most of their imports come from China.

11. Your Assignment Complete the “Who Am I?” sheet.
This should go in the CW/HW section of your notebook when completed.
Due tomorrow.