SS6E5A ECONOMIC SYSTEMS
ECONOMIC
SYSTEMS
Traditional
Economy
Command
Economy
WHAT WILL HOW IT WILL BE WHO WILL
BE PRODUCED
PRODUCED
PRODUCE IT
Farm Goods/Livestock
Gathering; Hand Work
Family or group
What is determined to be
important by the government
Amounts determined by the
government
Government workers
Market
Economy
Determined by demand
Determined by both makers and
sellers
Individuals and groups
Mixed
Economy
Determined by demand but
government may regulate
some pricing or production
Determined by makers and sellers
but government may regulate
safety
Private individuals may
own some business and
factories
EXAMPLES
In a traditional economy, there are very few
industries and citizens barter and trade goods
produced.
In a command economy, central planners make
production, consumption, and distribution decisions.
This economic system is most closely associated
with a communist country.
In a market economy the producers and consumers
control production, consumption, and distribution of
goods.
Market economies may also be referred to as Free
Markets or Free enterprise. This economic system is
most often associated with democratic
governments
Mixed economy is most associated with
democratic governments.
ECONOMIC CONTINUUM
Command
N. Korea
Market
Peru
Brazil
Based on your knowledge of economic systems, the diagram above shows that most economies are:
United States
a. Market
b. Mixed
Supply and demand and competition help to drive a market economy. Competition in a free market almost always benefits consumers.
Barter-to exchange goods or services in return for other goods or services; the practice or system of exchanging goods and services
Currency exchange systems are required to facilitate trade between international countries.
c. Pure
d. Command
SS6E5A ECONOMIC SYSTEMS
COUNTRY
ITALY
GERMANY
GEORGRAPHY
Slightly larger than Arizona. Italy’s distinct shape (the boot) makes it one of the
most recognizable countries in the world. Being a peninsula, the majority of the
country is surrounded by the crystal blue Mediterranean Sea leading to nearly
8000 km (nearly 5000 miles) of stunning white sand beaches.
At 137,847 square miles, Germany is just a little bit smaller than
the state of Montana.
TOPOGRAPHY
Mostly rugged and mountainous; some plains, coastal lowlands
CLIMATE
The Northern part of Italy has hot summers and cold winter, although the
temperature rarely drops below freezing during the daytime.
The South enjoys mild winters and long, dry, hot Summers. Mountain areas such
as the Alps and the Apennines have long; cold winters long and short, cool
summers.
The Gross Domestic Product (GDP) in Italy was worth 2194.75 billion US dollars
in 2011, according to a report published by the World Bank.
With its irregular, elongated shape, Germany provides an
excellent example of a recurring sequence of landforms found
the world over. A plain dotted with lakes, moors, marshes, and
heaths retreats from the sea and reaches inland, where it
becomes a landscape of hills crisscrossed by streams, rivers,
and valleys.
The average January daytime temperature is 3°C (38°F) and in
July is 22°C (72°F). Extremes commonly reach -10°C (5°F) in
winter and 35°C (95°F) in the summer months.
GROSS DOMESTIC PRODUCT
(GDP)
NATURAL RESOURCES
Italy lack natural resources such as coal and iron. Major exporter of olive oil,
tomatoes, and other farm products.
3.158 trillion of International dollars
Germany’s Ruhr Valley region is rich in iron ore, but not in
natural resources. Must import much of its energy (Large
amounts of natural gas from Russia). Skilled work force.
Based on the data above and your knowledge of economics, an abundance of natural resources in a country has a big impact on its:
a. Geography b. GDP c. Topography d. Climate
Gross Domestic Product (GDP) refers to the value of the total amount of goods and service produced in a country in a year. A nation must produce goods and services to
support a growing economy.
Production- This is the making of goods and services. The four factors of production are the ingredients, or elements, needed for production to occur.




Entrepreneurs- These are the people who bring natural resources, labor resources, and capital resources together to produce goods and services.
Investments in Human Resources- Workers are needed with the appropriate knowledge, skills and expertise to make goods or provide services.
(education and training)
Investment in Capital Resources- Machines, factories, and supplies are needed.
Investment in Natural Resources- Raw materials are used to make goods. (land, water, forest, minerals, soil, and climate)
There is a direct correlation between investment capital (factories, machinery, and technology) and the GDP of a country.
There is a relationship between education levels and human capital in terms of their ability to produce income.
Goods- A good is something that you can use or consume, like food or CDs or books or a car or clothes. You buy a good with the idea that you will use it, either just once or over and over again.
Services- A service is something that someone does for you, like give you a haircut or fix you dinner or even teach you social studies. You don't really get something solid, like a book or a CD, but
you do get something that you need.