1. TRADITIONAL 2. FREE-MARKET 3. COMMAND 4. MIXED ECONOMIC SYSTEMS A.Answers three questions 1.What goods and services should be produced? 2.How should those goods and services be produced? 3.Who should get the goods and services? ECONOMIC SYSTEMS B.Economic Systems: The way that a country or culture produces and distributes goods and services 1.TRADITIONAL 2.FREE-MARKET 3.COMMAND 4.MIXED C. TRADITIONAL ECONOMIC SYSTEM 1.Boys follow the example of dad. 2.Girls follow the example of mom. 3.Laws are passed down from elders to the youthwho become the eldersto youth. ECONOMIC SYSTEMS D. FREE MARKET ECONOMY 1.Demand Economy 2.Usually found in democracies a.An economic system in which people, not the government, control the production and distribution of goods and services b.When they buy something c.Also called capitalism d.Due to the freedom of choice FREE MARKET ECONOMY E. How Market Economies Work: 1.C onsumers buy an item 2.S tore orders more of that item from the factory 3.F actories make more because the stores ordered more 4.F actories make more and send that item to the stores 5.C onsumers buy more 6.S tores order morefactories FREE MARKET ECONOMY F. Characteristics of a Market Economy: 1.Freedom to own property 2.Businesses are owned by people 3.Free to own any business you like (some exceptions) 4.Economic freedom of choice: a.JobB. FoodC. Clothes FREE MARKET ECONOMY G. How Market Economies Work: 1. Freedom to compete 2. Businesses are allowed to succeed a.Businesses can earn a profit Profit: The money made by a business or person after all costs have been paid Profit: The money made by a business or person after all costs have been paid b.The greater the profitthe higher the standard of living FREE MARKET ECONOMY THANKS TO YOUR BUDDIES COMMUNISM H. Command Economy: An economic system in which the government controls the production and distribution of all goods and services COMMAND ECONOMY 1.Central Planners (Government) Tells factories what to make 2.Factories make the items and send them to the stores. 3.The Government (Central Planners) tells the stores what to charge. 4.Consumers have to buy whatever the stores haveif anything. COMMAND ECONOMY MIXED ECONOMIC SYSTEMS I. Mixed Economy: An economic system that includes both private ownership of property and government control of some services and industries: 1. Army2. Post Office 3. Prisons4. Minimum wage 5. Working conditions United States is not a pure market economy. United States is not a pure market economy. U. S. is a Mixed Economy U. S. is a Mixed Economy ECONOMIC SYSTEMS J. Goals of an Economic System: 1.Everyone has a job 2.Everyone has a place to live 3.Everyone has enough to eat K. Strong economy equates to a high standard of living 1.Standard of Living: A way to measure how well the needs and wants of citizens are being met by a countrys economic system. ECONOMIC SYSTEMS Reach For A Star Productions John P. Luke