1. In a PURE MARKET ECONOMY ____________________________________ in economic decisions. The government lets the market answer the three basic economic questions: 1. What? Consumers ________ what should be produced in a market economy through the _______________ they make. 2.How? Production is left entirely up to ___________. Businesses must be __________ in such an economy and produce quality products at lower prices than their competitors. 3.For whom? In a market economy, the people who have more ________ are able to buy more _____ and services.

2. Capitalism features private ownership of businesses and marketplace competition. It is the same as a _____ ________ ____________. The political system most frequently associated with capitalism is ___________.

3. In a PURE COMMAND ECONOMY __________________________in economic decisions. The government answers the three basic economic questions: 1. What? In a command economy, _________ officials decide what will be produced and in what amount. 2.How? Production is left entirely up to the _____________. The government owns the means of production. Businesses and property belong to the government. 3.For whom? In a command economy, the government decides for whom to produce without considering _______ demand. A command economy is designed to keep a _____ people from becoming rich while the rest of society struggles or winds up in ________________.

4. ___________: is a pure command economy. In this system, _____, property, and businesses are in the hands of the government. The state owns the factors of production, and government officials decide the answers to the basic economic questions.

5. Economic Systems There are no PURE market economies. There are no PURE command economies.

6. Mixed Economies Nearly all modern world economies have characteristics of both market and command economic system. They are called ____________________. Formula?:

7. Mixed Economy Mixed economies are not totally command or ________ market. They have elements of both. However, some mixed economies lean more towards ______ markets and some tend to lean more toward __________ structures.

8. Mixed Economy The United States is not totally a market economy. It is a _______ economy. Example 1: The economy of the United States is based on private enterprise. However, some industries (for example, power companies and railroads in some areas) are under collective ownership.

9. Example 2: The United States government is involved in the economy through laws and regulations governing businesses, and it provides socialistic programs, such as welfare, Medicaid, and Medicare. Example 3: The government monitors how stocks are traded, outlaws monopolies, and will intervene if inflation gets out of control. HOWEVER, the United States government tries to let the market operate as freely as possible.

10. Mixed Economy China is not a totally ___________ economy It is a mixed economy. It places strict controls on its economy, and many of the larger industries are owned by the state. In recent years, though, China’s desire to compete economically in the world has led it to allow some private ownership and business.

11. It is possible to look at economic systems along a continuum. Typically, the continuum runs from a Pure Command Economy to a Pure Market Economy.

12. On a continuum, from Pure Command Economy to Pure Market Economy, economic freedom runs from none to total.

13. On notebook paper, draw and label this continuum. 1.Place the economy of the United States on your continuum. 2.Place the economy of Cuba on your continuum. 3.Place the economy of the People’s Republic of China on your continuum.

14. On this continuum, the economy of the United States would be placed closer to the right-hand side of the line than the left-hand side. China would be placed much closer to the left-hand side of the scale. Cuba would be placed closer to China than the United States. (Of course, the placements on the continuum could change if political or economic changes are made in these countries.)

15. Task: In a well-written paragraph, explain why the United States economy is placed where it is placed on this continuum.