Terms in this set (21)
Traditional Economic System
An economic system in which economic decisions are based on customs and beliefs
Do what parents and others do.
Example of Traditional Economic system
Villages in Africa and South America
the Inuit tribes in Canada
the caste system in parts of rural India
the Aborigines in Australia
Government makes all economic decisions & owns most of the property
Governmental planning groups determine such things as the prices of goods/services & the wages of workers
Example of Command Economic system
Countries with communist governments have Command economies
Examples: North Korea, former Soviet Union, Cuba
An economic system in which production and distribution questions are answered by prices and profits (supply and demand)
Most of the resources are owned by private citizens
Economic decisions are based on Free Enterprise (competition between companies)
Example of Market Economy
There are no truly pure Market economies, but the United States is close.
Market + Command = Mixed
Businesses own most resources and determine what and how to produce, but the government regulates certain industries. Most Democratic Countries
Mixed Economic System
Type of economic system in most democratic countries
Command Economic System
Type of economic system in most communist countries
Three Basic Questions of Every Economic System
WHAT TO PRODUCE? (What kinds of goods and services should be produced?)
HOW TO PRODUCE? (What productive resources are used to produce goods and services?)
FOR WHOM TO PRODUCE? (Who gets to have the goods and services?
Economic system in which individuals and businesses are allowed to compete for profit with a minimum of government interference - Found in Market Economies
Exchange of Goods is done through trading and without money. Found in traditional economies.
System Based on Individual Choice
Which European Countries Are closest to Market Economies
Those in the European Union, England Germany, France,etc
A tax on imported goods
A limit on goods produced or goods imported
Restrictions on Trade
Limited quantities of resources to meet unlimited wants.
Bringing a good or service into one country from another, Buying products from another country
Sale of products produced in one country to residents of another country
Productive potential of an individuals knowledge and actions