1. Economic systems

2. Economic systems: A nation’s way of producing things its people want and need
Different types of economic systems: Market, Command, & Mixed
Three basic questions: What to produce, how to produce, and for whom to produce.
Each economic system answers these questions differently.

3. Market economies
All questions are answered by the market---they are decided by businesses and consumers.
Laissez-faire economics – belief that the government should not interfere with the economy.
Characteristics:
Individual freedom
Competition
Some dealing with externalities
Higher GDP

4. Command economies All questions are answered by the government.
Characteristics:
Socialism – “Diet Communism” – The factors of production should be owned by society, either directly or through the government. This should make wealth more equal among citizens.
Communism - All property has shared ownership, equal distribution of wealth among citizens.
Government Control
Slow Growth – lower GDP (ex: North Korea)

5. Mixed economies Most countries actually have a mixed economy.
Individuals are free to make economic decisions, but are subject to some government regulations.
Sometimes the government even participates as part of the economy!
Postal Service, highway system