1. Types of Economies

2. Command Economy Strong government control Government controls all means of production (land, labor, and capital) Government decides: –What to produce –How much to produce Goods distributed to people on an as-needed basis

3. Capitalistic Economy Also called a Free Market Economy Very little government control No governmental permission needed to start your own business Consumer-driven

4. Capitalistic Economy cont. Supply and Demand –Free market economy is driven by supply & demand –Sets prices of goods and services –Supply goes up, prices go down –Demand goes up (supplies are down), prices go up

5. Mixed Economy Combines elements of Command and Capitalistic Economies Has both privately and publicly-owned businesses

6. What is the driving factor in a Capitalistic Economy? What three things make up the means of production? What is another name for a Capitalistic Economy? How much control does the government have in a Command Economy? Why does the U.S. lean more towards a Mixed Economy? Review Questions