1. Economic Systems

2. Economics: The production, distribution, and consumption of goods and services
Economic Systems:
How a country decides the following:
- What will be produced?
- How will it be produced?
- Who will it be produced for?
…and who decides these questions?

3. 1. Traditional Economy “Because that’s the way we’ve always done it!”
Economic decisions based on tradition and custom
Production done the way it has
always been done
Examples: Rural, tribal
areas of South America
and Africa

4. Market Economy: “Capitalism” Command Economy: “Communism”
Mixed Economy:
“Socialism”
Less
Government
Control
More
Government
Control

5. 2. Command Economy: “We do what we’re told!”
COMMUNISM
-All economic decisions are made by the government
Government controls all economic activity
Father of Communism: Karl Marx
Examples today: North Korea, Cuba, old Soviet Union

6. 3. Market Economy: “We do whatever we think is best!”
CAPITALISM
-All economic decisions are made according to the wishes of buyers and sellers
Individual choice, not government direction
Father of Capitalism: Adam Smith
Examples today: United States, Australia, Canada, Great Britain

7. 4. Mixed Economy: “We can usually do whatever we think is best, guided by the government
SOCIALISM
-No system in the world is purely Communist or Capitalist
A mix of command and market economies
The government is involved in some aspects of the economy
Examples today: France, India, Sweden, Venezuela

8. Communism Capitalism Socialism United States Great Britain North Korea
Canada
Sweden
United States
Great Britain
France
Venezuela
China
Cuba
North Korea
Communism
Capitalism
Socialism