Comparing Economic Systems

14.1 Remediation Assignment

Market Economy

A market economy can be compared to capitalism because the economic decisions are made by individuals not by the government. A example would be Hong Kong, they have a market economy. The choices the consumers make affects the products that businesses make and the profit they receive. There are two major aspects of a market economy, capitalism( individuals own most means of production) and free enterprise( businesses can compete freely for profit with minimum government involvement). The major goals for a market economy is equality, market stability, freedom, efficiency, security, and growth.

Traditional Economy

This economy is based on basic roles that have been installed for centuries. Like the "man of the household", of course that has changed but this economy is where the leaders made most of the decisions. You could describe this as a dictatorship or that this economy is a hunter/gatherer type. A example would be in some areas of Africa, they have a traditional economy.

Command Economy

A command economy is where the basic questions are answered by a central authority. This could be by the government or a group of authorities. This economy is usually the case in communist countries.A example of a command economy is North Korea. The major goals of a command economy is just like the others, stability, growth, employment, efficiency, and equality.

Mixed Economy

A mixed economy incorporates traditional, command, and market economies together. Government involvement is probably balanced with individual involvement. A example of a countries with this economy is the United States, Japan, Germany, and Australia. There are five basic goals of a mixed economy; full employment, stability, economic growth, efficiency, and equity.

Vocab

Resources- can be human or capital, used to make goods and services
Wages- what someone earns after completing a good or service can be weekly, monthly or annually
Production- creation of products or services
Employment- the amount of people that have a job
Monopoly- where one business dominates the industry and has control over the price
Competition- where several businesses in the same industry compete for profit, keeps consumer prices low