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Economic Sysytems

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david yang

on 9 October 2013

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Transcript of Economic Sysytems

Economic Systems
By: David Yang
Period 4
A underdeveloped economy in which communities use tools and harvest methods and hunt for food.
Characterized by very low unemployment rate.
Countries that evolve their economies when in traditional are often developed to market or command economy.
This picture shows an example of a traditional economy and the farming they have to do in order to have crops.
This economic has little economic growth and are often in rural areas with high levels of farming.
This economic system is heavily influenced by habits, customs, and religious beliefs.
Individual freedom is limited(roles of individuals are static from generation to generation).
Traditional economies are mostly found in third world countries in South America, Asia and Africa.
Planned or Command Economy
A economy where the government, determines what goods should be produced and how much should be produced.
Also, determines the price of the goods and determines how to get the goods.
The command economy is a key feature of any communist society.
Planned or Command Economy
Some countries that use the command economy are China, Cuba, North Korea and the former Soviet Union.
This system is unable to efficiently allocate goods because of the knowledge problem.
Government directly influences and vastly controls business practices due to ownership of natural and capital resources.
Planned or Command Economy
An advantage is a central planning authority. Also, the planning leads to a faster economic growth, reduction in inequalities of income and the stability of prices.
The Disadvantage is that it resist change as people will think that what is passed on by the ancestors will always be right or correct.
The advantage is that only produces goods that are important and needed to survive and not the stuff that is needed as much is not really grown.
A disadvantage is a body of planners tries to coordinate all the economic decisions about production which leads to any reasonable degree of efficiency.
Command or Planned Economy
Considered synonymous with either a communist or socialist economy, depending upon the degree of government control.
Market Economy
A market economy is an economic system in which economic decisions and pricing of goods and services are guided solely by the aggregate interactions of a country's citizens and businesses and there is little government intervention or central planning.
Privately owned factors of production(i.e., factories and machines).
Market Economy
Prices are influenced by supply and demand.
Considered synonymous with a capitalistic economy.
Individual's purchasing decisions determines the types of products and services offered.
Market Economy
Minimal government involvement in business transaction.
Disadvantages is a private economy is unstable and prices might give false inadequate to producers and consumers.
Some advantages are the market provides incentive to acquire useful skills and the market system involves a high degree of economic freedom.
Market Economy
Competition pushes businesses to be efficient: keeping costs down and production high.
Mixed Economy
Privately owned factors of production (i.e., factories and machines).
Prices are influenced by supply and demand.
An economic system that combines elements of all the other basic systems.
Mixed Economy
Considered synonymous with a capitalistic economy.
Individual freedom is limited ( roles of individuals are static from generation to generation).
Is a economy that includes a variety of private and government control: reflecting characteristics of both capitalism and socialism.
Mixed Economy
Some disadvantages are can lead to inefficient outcome and the economy sometimes don't reach what they aim for and cost some businesses to fail or fall.
Some advantages are less inequality of income and rapid economic development.
Mixed Economy
The U.S. and Cuba both use the mixed economy.
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