1. Economic Systems ► Economists have identified 3 basic kinds of economic systems. ► 1. Traditional Economy ► 2. Command Economy ► 3. Market Economy

2. Traditional Economies ► Economic decisions are made according to customs handed down from one generation to another. ► People supply the goods they need by hunting, farming, gathering, and making things by hand.

3. Traditional Economies

4. Traditional economies are untouched by technology. ► Traditional ► Advanced

5. In a traditional economy economic activities center around the family.

6. Traditional Economies exist primarily in rural, non-industrialized areas. ► They can be found in parts of Africa, South America, Middle East, and Asia.

7. Command Economy ► The Government makes all the economic decisions. ► The government decides what to make, how many to make and how to make them.

8. The leaders direct the command economy as they see fit. ► Joseph Stalin of Russian and the Soviet Union had a command economy under his communist system.

9. The Government controls the means of Production and the resources. ► The Individual has little if any influence in economic decisions.

10. Disadvantages of a command economy ► There is no competition! The factories do not compete against each other. ► Consumers of no choice what to buy. Products are usually poorly made.

11. Advantages of a command economy ► Government sets prices so they can set low prices. ► Only a few nations have command economies since collapse of Soviet Union.

12. Other Command Economy Nations. Only a few nations have command economies since collapse of Soviet Union. ► China ► Cuba ► North Korea

13. Governments with Command Economies ► Give there people free health care ► Low cost housing ► Free education ► But these items are usually low quality.

14. Market Economies ► Consumers make basic economic decisions according to principals of supply and demand.

15. People are free to buy, sell and produce what ever they want. ► Individuals own the means of production. ► Capitalism- an economic system in which individuals put their money into a business in hopes of making a profit.

16. Profit is the motive under capitalism. ► Free Enterprise- an economic system in which individuals are free to own their own businesses, and competition helps determine prices.

17. Mixed Economies ► Economies that include private ownership and government guidance regulation. ► Individuals and the government share the economic decision making process.

18. Mixed Economy

19. Most economies are Mixed.