Economic Systems



Economic Systems

3 Types of Economic Systems

• __________________________

• __________________________

• __________________________

Traditional Economic System

▪ People rely on _______________ and very simple __________________ trading.

▪ Producers and consumers make choices based on what has been done in the past.

▪ Often economic decisions are handed down from _______________________________

▪ Example – _______________________

Command Economic System

▪ The most important aspect of this type of economy is that all major decisions related to the production, distribution, commodity and service prices, are all made by the _____________________________

▪ The ________________________________ decides what goods will be produced, and how they will be distributed.

▪ Is run by a strong centralized government and tends to focus on______________________________.

▪ Benefits

▪ ________________are controlled

▪ People know how much everything will cost

▪ _____________________ items are priced high

▪ Clothing & Housing ________________

▪ Health care & education provided for __________________

▪ Problems

▪ Trying to predict what type of ________________ people will need

▪ Can lead to having __________________of one good and __________________ of another

Capitalism/Market Economic System

In a market economy, national and state governments play a _______________role.

▪ ____________________________and their buying decisions drive the economy.

▪ A market economy is controlled by the forces of_____________________________.

▪ Allows business owners to compete in the market with ________________ government control. However, the role of government is important.

Capitalism/Market Economic System

▪ Decisions are left to ___________________________________________ and the forces of supply and demand to determine what is produced and its value.

▪ Example - ________________

▪ Benefits

▪ Consumers can find the goods they _____________

▪ Free to earn enough ___________________ as they want

▪ Problems

▪ Goods and services go _____________ in price

▪ If a _______________________ does not manage its money well it can go out of business (people loose their jobs & income)

There are no pure free market or pure command economies in the world. All economies are___________________.

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