2. The process of a nation, or society, follows to produce goods, and services Four types (traditional, command, market, mixed)

3. IN TRUTH ALL ECONOMIES ARE MIXED

4. Customs decide the what, how, and for whom to produce Village life Family tradition

5. Government answers what, how, and for whom to produce Also called Planned Economies

6. Individuals answer what, how and for whom Government no say

7. Free exchang e of goods & services

8. Adam Smith (1723- 1790) Explains how market regulates economic activity

9. Government not involved Purely, people want to fulfill their needs and wants

10. Invisible hand Unaware of selfish actions helping society

11. Combines elements of traditional, market and command economic models

12. Three main categories of Mixed Economies 1.Authoritarian socialism 2.Capitalism 3.Democratic socialism

13. Closest to pure Command model Communism

14. Government owns or controls nearly all of factors of production

15. Closest to the Market Model Individuals own the factors of production Individuals decide the what, how, and for whom

16. Government ownership is limited to key areas Telephone electrical

17. People influence economic planning through election of government officials