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Different World Economies

Social Studies/Economics

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Descriptive Overview:

In this lesson, students willbe exposed to four types of

world economies. They will

also learn the historical

background that led to theformation of those economies,

specifically command and

mixed economies.

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Lesson Objectives/GoalsjDescribe and compare the

economic systems predominate inthe world today.

jCompare and contrasttraditional, command andmarket economies.

jExplain how mixed economiesare a combination of other

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Terminology/Vocabulary

jCapitalismjTraditional Economy

jCommand Economy

jMarket Economy

jMixed Economy

jFree Enterprise

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Adam Smith

Adam Smith

(1723-1790) is

considered the

father of

moderneconomic theory

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Karl Marx

Karl Marx

(1818-1883)

Co-author

The Communist

Manifesto

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Traditional Economies

j Traditional economies are found in

rural, non-developed countries

j Some parts ofAsia, Africa, South

America and the Middle East have

traditional economies

j Customs govern the economic

decisions that are made

j Technology is not used in traditional

economies.

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Traditional Economiesj Farming, hunting and gathering

are done the same way as the

generation before

j Economic activities are usually

centered toward the family or

ethnic unitj Men and Women are given

different economic roles and

tasks

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Command Economiesj The government or other central

authority makes decisions anddetermines how resources will be

used

j Change can occur relatively easily

j There is little individual freedomj There is no competition

j Businesses are not run to create a

profit

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Command Economies

j Consumers have few chooses in the

market place

j Factories are concerned with quotas

j Shortages are common because of poorly

run factories and farms

j The government dictates the job in which

you work

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Command Economies

j The government sets the prices of goods

and services

j Examples of command economies: Cuba,

North Korea and the Peoples Republic ofChina

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Market Economiesj Resources are owned and controlled by

individualsj Economic decisions are made by

individuals competing to earn profits

j Individual freedom is considered very

importantj Economic decisions are made by the basic

principals of supply and demand

j Profit is the motive for increasing work

rather than quotas

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Market Economiesj Also called capitalist economies

j There are many economic freedoms

j There is competition among businesses

j Competition determines price which

increase the quality of the product

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Mixed Economiesj Government and individuals share the

decision making processj Government guides and regulates

production of goods and services offered

j Individuals own means of production

j Protects consumers and workers fromunfair policies

j Most effective economy for providing

goods and services

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Four Types of EconomicsjTraditional Economies

jCommand Economies

jMarket Economies

jMixed Economies

Review