Economic Systems
Written by Ashley Hopkins and Frank Flanders, Ed D
Resource Network 2010
Objectives
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Students will be able to list and describe the five
major economic systems.
Key Terms
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Economy
Mixed Economy
Pure Economy
Market Economy
Command Economy
Capitalism
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Communism
Socialism
Privatization
Transitional Economy
Traditional Economy
Define Economy
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The organized way a nation provides
for the needs and wants of its people.
Economic System
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Political philosophies
that shape the world
economies.
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Communism
Socialism
Capitalism
Three Economic Questions
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All economies must
answer these three
questions:
 What goods and
services will be
produced?
 How will they be
produced?
 For whom will they be
produced?
How are Economic Systems
Categorized?
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Some standards that are used to
distinguish between economic systems are:
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Who owns the resource?
What decision making process is use to
allocate resources and products?
What types of incentives guide economic
decision markets?
Is there such a things as a
Pure Economy?
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No.
Every economy has influences that
make it at least somewhat mixed.
How is the government involved in the
U.S. economy?
Mixed Economy
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All economies in the
world today are
mixed.
The economic
classification depends
on how much a
government interferes
with the free market.
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There are three political
philosophies that have
shaped the worlds
economies
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Capitalism
Socialism
Communism
The Three Most Prominent
Economic Types Are:
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Capitalism
Communism
Socialism
Capitalism
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A.K.A. Market Economy
This economy is
characterized by
marketplace competition
and private ownership of
businesses.
Also called a Free
Enterprise System
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Any income derived from
selling resources goes
exclusively to each
resource owner
Government in a capitalist
society is concerned
about the people and
cares for those who
cannot care for
themselves.
Democracy
Communism
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A.K.A. command
economy.
The government plays
an authoritarian role in
the economy
The government
controls the factors of
production.
No private ownership of
property or capital.
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The theory behind
communism is that is
the government
controls and owns
everything everyone’s
needs will be met and
there will be no social
classes!
Socialism
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Main goal is to meet basic
needs for all and to
provide employment for
many.
The same idea as
communism, a classless
society
Democratic political
institutions.
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Differ from capitalism
because of the
increased amount of
government
involvement.
Medical care is free
Pay much higher taxes
Government runs key
industries and makes
economic decisions
Other Economic Types
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While capitalism, communism, and
socialism are the most prominent types
there are two others.
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Transitional Economy
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Traditional Economy
Transitional Economy
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It involves converting state-owned
enterprises into private enterprises—
privatization.
These economies are in transition
(changing) from one system from another.
Traditional Economy
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A traditional economy is
shaped largely by custom
or religion (tradition).
Family relations also play
significant roles in
economic activity.
This type of economy
ensures that every
member of society has a
purpose and as well, a
participatory function in
society.
Example of Economic Systems
& Countries
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Capitalism/Market Economy – United States
Communism/Command Economy - Cuba, Libya,
Saudi Arabia, Iran, North Korea, and Burma
Socialism- Canada, Germany and Sweden
Transitional Economy - China and the former
Soviet Union
Traditional Economy - Brazil and Papa New
Guinea.
Review
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Economies must answer the following:
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What goods and services will be produced?
How will they be produced?
For whom will they be produced?
Five major economic systems are:
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Capitalism/Market Economy
Communism/Command Economy
Socialism
Transitional Economy
Traditional Economy
Review Con’t…
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Describe the three most prominent
economic systems in the world?
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Capitalism
Communism
Socialism
Review Con’t…
What are some countries with the following
economic systems?
 Capitalism/Market Economy – United States
 Communism/Command Economy - Cuba,
Libya, Saudi Arabia, Iran, North Korea, and
Burma
 Socialism- Canada, Germany and Sweden
 Transitional Economy - China and the
former Soviet Union
 Traditional Economy - Brazil and Papa New
Guinea.
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