Types of Economic Systems
1.
_______________
2.
_______________
3.
_______________
There are no countries with these actual systems, all have a __________of some kind
Traditional Economy

Families or tribes make economic decisions based on __________ and ____________.

Based on ____________and customs handed down through the generations

One goal is simply to ___________ and everyone has a role in meeting this goal

The good of the group always is put ___________ individual preference

Sometimes found within another economy as a ___________ society (Amish, tribes in South America and
Africa, etc.)
Command Economy

The ___________decides what goods and services to produce, how this will be done and who will get them

Government makes these decisions based on their _____________ rather than citizen preference

Government often owns means of production – ___________________ and factories

North Korea and ________ are closest to this type of economy
Market Economy

_______________ makes the economic decisions

Consumers spend ________ the way they wish, enter into business, _____ their labor

Producers _________ what to produce and how to use their resources to make the most money possible

Individual act in their own ______________ which, in theory, benefits others (Adam Smith’s theory)
Characteristics of a Traditional Economy
Advantages : It clearly _________ the three economic questions; Produces what is best to ensure the
_____________of the society with little disagreement over goals and roles
Disadvantages: Resistant to _________, less _____________ than other economies, often no personal preference about role they play or use of _______________ of the individual, no development of _______so standard of living is lower
Characteristics of a Command Economy
__________ planned economy – leaders decide specifics such as wages, who gets those wages and how they are spent (What businesses can operate in your town; What these businesses would ________ and how much;
_______would work in these businesses and how much each of them would ______)
Problems:

_______________ preferences are not often taken into consideration

Development is often limited to ___________ areas (former Soviet Union – space travel; North Korea – weapons and arts)

Lack of ______________ (may even be restricted)


______________ preferences are not often taken into consideration
Development is often limited to __________ areas



 former Soviet Union – _______travel
North Korea – __________ and arts
Lack of ______________ (may even be restricted)
Characteristics of PURE Market

No _____________ regulation or involvement

Based only on _______/demand

Right to own property and make a_________

Right to __________ wealth
Disadvantages of Pure Market

No Government controls

_________ and corruption are not limited

______________concerns are not addressed

Working conditions and __________ pay are not priority

No way to provide public _________to those who cannot get them on their own

Tends to be a _____ in standard of living – “class” system can develop
Mixed Economies

Authoritarian Socialism


_______________
Democratic Socialism

Socialism with citizen input

_______________

Market with government control – the more control the government has, the closer it moves to socialism
Authoritarian Socialism

___________ to the pure command model


Often called _____________
Government __________all factors

Government often develops a long term plan for how ___________ are used and production is distributed -
Cuba

May have a ____________government - North Korea

May have elements of _______ types of economies - China

________________ answers the three questions (central planning)

Often a _________ or religious authority

People have ______ or no say in their economic lives
Examples:
North Korea (__________ to pure command): Some areas in Africa (tribal leaders); _________ nations; China
Problems with Authoritarian Socialism

Technological advancements are not encouraged except in the ________ areas (former Soviet Union and
_________travel)

All resources tend to be ______________in one area (North Korea – military related production)

Human rights are often _____ a priority (worker rights, reproductive rights, family choices, etc)
Democratic Socialism

_____of market and command

Government owns _______ factors of production

Often ___________ to utilities, telephone networks and natural resources


Control of these factors are often influenced by individuals through democratic ____________
May include a _________

Examples of Democratic Socialism in the United States

Control of banking industry through __________________

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Infrastructure (bridges, roads, etc)
Military

______________

Police and Fire protection

Public Libraries

_________________ and Social Welfare Systems
Other Democratic Socialism Countries
Sweden, Poland, __________, Angola, Mozambique, Tanzania, _____________ (although also strong Capitalism)
Capitalism

___________ to Market


Individuals own the factors of production and answer the _________questions
Government does ___________ to prevent “market inequalities” such as:

Environmental Protection

Working Conditions and ________ rates

Product Safety
Problems with Capitalism

Tends to favor _____________over worker

Political _____________ over amount of government regulation (a key difference between Republicans and Democrats in our country)

Regulation limits corporate _________
Examples of Capitalism
United States,___________, Mexico, Japan
All of these have ______________ of Democratic Socialism – education, medical care (except US), natural resource management, etc.
Market Economies (Capitalism) - Fundamentals

Right to _______property

_____________government involvement – does not mean NO involvement – means government only steps in when and where necessary (example: economic crisis)

Voluntary exchange – buying and selling occurs because ________parties benefit

Specialization and Markets – people ________________ their efforts in the areas they do best (advantages)

Competition and Consumer Sovereignty – consumers are free to _______________ what they want
(ultimate control over what is produced)
Circular Flow of Free Market

Example – page 53


A circular flow model shows how the ____________ sectors relate to one another
The free market model shows ______________ between us (households) and businesses

This is divided into product market and ___________ market
Factors Market

Households sell their _____________ (particularly labor and entrepreneurship to businesses.)

In exchange for the resources, businesses pay ___________ to households

Product Market

Businesses ______ goods and services to households


Households send payments for goods and services to ____________. consumer spending and business revenue
Trends in Modern Economies

Changes in ownership

Moving toward a ____________or Capitalistic system often leads to privatization of resources (former
Soviet Union)

Moving toward ____________ or Authoritarian Socialism often leads to nationalization of resources
(Venezuela)

Economies are becoming more _________ in trade, business ownership, sharing of research and development expenses, etc
What type of economy do you have and WHY

Who owns and controls the natural and capital resources?


How are workers paid and how much independence do they have
Private ownership of businesses?

Elected Government in true elections?