TRADITIONAL ECONOMY The basic economic decisions are made
according to long-established ways of behaving.
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Characteristics Behaviors unlikely to change and passed from
elders to youths Usually used by people who own their own
resources- tribal hunters Tradition/customs answers the 3 major
economic questions- What and how much to produce (game and enough
to feed tribe) How to produce (tools and methods) Who gets the
product (divided evenly, based on role in the hunt, role in the
tribe) Freedom to make day to day decisions (hunt or gather)
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Where can you find it? Very few exist: Parts of central and
South America, Africa, and Asia
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COMMAND ECONOMY The government or central authority
owns/controls factors of production makes all basic economic
decisions
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Characteristics Government usually in charge of transportation,
communication, banking, and manufacturing (including job
opportunities and wages) Central planning group makes decisions of
how, what, and how much is produced. Government decides what is
produced and what is purchased Who gets goods and services varies:
only the rich or evenly divided Little individual freedom
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Where can you find it? Economic system principles have existed
for thousands of years (Ancient Egypt to Soviet Union)
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Market Economy (Free Market) System in which private
individuals make their own choices about production, distribution,
and consumption.
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Characteristics All economic decisions made through bargaining
(Free enterprise, buyers and sellers) No one person or group runs
the market economy Individuals free to make decisions (Capitalism):
- How to use land, labor, and capital - Choose to start own
business - Choose own job/profession People who make more desirable
products or earn higher wages---can buy more goods and services -
Choose who will get what is produced Competition, profit, and
investment are vital to success
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Where can you find it? The US economy is based on the Free
Markets
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Mixed Economy A type of economy that combines elements of the 3
main types
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Characteristics Most common form of economic system today
China: 1980s- still command economy 1990s started adding Free
Enterprise Principles Today, China is still Communist but has some
Free Enterprise Principles
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Characteristics The U.S. is considered Free Market- but has
elements of a Command Economy Government Command of specific
services: Education Mail National Defense Highways and
Airports