Economic Systems
8th Grade U.S. History
Mr. Embry
Chart Activity
• Complete the Major Economic Systems
chart handout as we progress through the
notes.
Three Basic Questions???
• Every society must answer three basic
question. Who or What Determines:
1. What gets produced?
2. How things get produced?
3. For whom to produce for?
Different Types of Economies
• We have three different types of economic
systems.
1. Market 2. traditional 3. Command
What is a Market
Economy?
• Definition- economic system in which the
prices of goods and services are
determined by supply and demand.
• This can also be referred to as a Free
Market Economy.
• Examples: United States,
Japan, France, and England.
Market Economies Three
Basic Questions
•
The producers and consumers in a
market place are responsible for deciding
what gets produced, how things are
produced, and for whom they are
produced for.
Advantages of Market
Economies
1. Can adjust to change easily.
2. Provides a variety of goods
and services.
3. People have the ability to make
as much money as they can and
do what’s in their best interest.
4. For the most part, businesses can
produce what they want, when they
want.
Disadvantages of Market
Economies
1. Doesn’t always provide the basic needs to
everyone in society (sometimes the weak, sick,
disabled, or elderly have trouble providing for
themselves).
2. Does not guarantee security or financial
success.
3. Occasional market failures (which can lead to
some companies having to much power and
becoming a monopoly, charging outrageous
prices).
What is a Traditional
Economy?
• Definition- economic system in which
resources are given by inheritance.
• This economy has a strong social network
based on older methods and tools.
• Examples: Ethiopia, Somalia,
New Guinea
Traditional Economies
Three Basic Questions
• In this type of economy, the three basic
questions are settled by traditions,
customs, and beliefs.
• This is the basis for deciding
what gets produced, how things
are produced, and for whom they
are produced for.
Advantages of
Traditional Economies
1. People have individual roles
that are clearly defined.
2. Best of the past is retained
and continued.
3. Older ways have proved to
be effective for survival.
Disadvantages of
Traditional Economies
1. These types of societies are
slow to change.
2. New technology is discouraged, making it
harder to improve.
What is a Command
Economy?
• Definition- an economy in which the
government manages the economy.
• Examples: Cuba, North Korea, Bulgaria,
China
Command Economies
Three Basic Questions
• In a command economy, the three basic
questions are settled by economic
planners from the central government.
Advantages of
Command Economies
1. Guarantees equal standard of
living for everyone.
2. Needs are provided through
the government (health care, education
hunger).
3. Less crime and poverty.
4. No sudden economic depressions.
Disadvantages of
Command Economies
1. Minimal choices for the people (careers
and goods).
2. No incentive to do better quality
of work.
Quiz Time
Major Economics
Systems Quiz
 Write either T or F I the blanks below. If you
answered F, tell why.
 ___1. List the three major economic systems.
 ___2. Which type of economy has its three basic
questions settled by economic planners from the
central government?
 ___3. Which type of economy has resources that
are given are given from inheritance?
 ___4. List two advantages of a market economy.
 ___5. What are the three basic questions that
every society must answer?
Quiz Time
 ___6. Which economy is also referred to as a Free
Market Economy?
 ___7. Ethiopia, Somalia, and New Guinea are all
examples of what type of economic system?
 ___8. Which type of economy has its three basic
questions settled by producers and consumers in
a market place?
 ___9. Give two examples of where we can find a
command economy?
Quiz Time
 ___10. List one advantage of a traditional
economy.
Final Answer?
 How well did you do?