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?