The Three Major Economic Systems

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China
 United States
 Germany
 South Africa
 Canada

China-Mixed Economy (Leans toward
Command)
 United States-Mixed Economy (Leans
toward Market)
 Germany-Mixed Economy
 South Africa-Mixed Economy
 Canada-Mixed Economy
 Did these answers surprise you? Why or
Why not?

The economy is run by an authority and
not the market.
 The authority tells people what to make,
how to make it and how much to make.
 The authority controls the economy
through quotas, rationing and price and
wage controls.

Maximize resource mobilization for the
benefit of the country
 Radically transform the socio-economic
system for better economic equality
 Organize the economy

Effective and rapid
economic
modernization.
 Attempted
economic equality

Inefficiency of economy
 No “material incentive” or “profit
motive”

 Why
might people want a
Command Economy?
 Why aren’t there more
Command Economies in the
World?
Market economies emphasize private
property, self interest and freedom of
enterprise and choice
 This is accomplished through limited
governmental role in the economy, no
price controls and promotion of
competition.

 Full
Employment
 Low Inflation
 Economic Growth
 Efficiency of the
Economy
Efficiency in producing what people
want to buy at the lowest cost
 Promote economic growth
 Free entry and exit of businesses

Low Economic Equality
 Full Employment?

 How
does a Market Economy
fulfill its purposes?
 Why would the purposes of a
Market Economy be
necessary in a modern
economy?
Hard to define
 But, it combines economic freedom with
government regulation
 People have the freedom to produce
what they want in the manner they want
 The government can regulate
businesses, like passing minimum wage
laws

Have the public and private sector work
harmoniously together
 Businesses can perform efficiently while
the government can make sure those
businesses are being fair and to limit
negative externalities

Allows for competition among businesses
 But, government regulation protects the
public from the worst aspects of
economic freedom.
 Taxes help pay for government programs

The wrong regulation can be
catastrophic to the economy
 Businesses have no say in how much
they get taxed

 Why
would businesses need
regulation?
 How does a Mixed Economy
limit the worst aspects of a
Command Economy and a
Market Economy?
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