Economic Systems

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Soc sci

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8 Terms

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Traditional economy

This economic system is simply based on ancient rules. The production of goods and services are mostly based on their customs, beliefs, and traditions. Often, the this economy will use barter or a direct exchange of goods and has no concept of money.

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Traditional economy

What economic system are the following characteristics are present:

  1. Their economies are often based on agriculture, hunting, fishing, and gathering.

  2. Barter is used in place of money.

  3. People in this type of economy live in a family or tribe.

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Traditional economy

What economic system has these

Advantages:

  1. It is family-oriented, as skills to produce goods and services are handed down from generation to generation. The process of keeping tradition helps to keep the family units together.

  2. People in this economy are often nomadic. Hunting and gathering are ways to acquire food.

  3. People will just produce what they need. The surplus is a rarity in this kind of economy.

  4. It relies merely on the barter system. Through bartering, goods for survival are being met.

  5. It is very predictable in terms of answering the questions of WHAT, the HOW, and FOR WHOM since these are determined by customs and traditions.

Disadvantages:

  1. In this economy it tends to discourage new ideas and new ways of doing things. The word change is not a common word in this kind of society.

  2. The strict rules and regulations of the this society have the effect of punishing its members by simply deviating or breaking the rules.

  3. Lower standard of living and stagnation is another consequence of the this economy.

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Command economy

It is important to note that in this economy, central planners own or control the means of production within society. It is an economy in which the government determines prices and production and even creates a mechanism for the distribution processes.

Private ownership such as land, labor, and capital is either nonexistent or in limited use. Competition is highly prohibited in this kind of economic system.

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Command economy 

What economic system has these

Advantages:

  1. It has the capability to dramatically transform the structure of society to obtain the goal of every nation.

  2. There is less thing to worry about since people do not have to bother about what they will study, or work, or even losing their jobs.

  3. Education, public health, and other basic services are at a low cost.

Disadvantages:

  1. This economy discourage innovation. New and different ideas are discouraged.

  2. This economy is designed to provide the basic needs and not the wants.

  3. meet the 'wants' but basic needs are provided by the government.

  4. Giving incentives or rewards in this kind of economy is not common. In most is this economies people receive similar wages although workers have different skills and responsibilities.

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Market economy

It is the opposite of command or planned economy. The answers to the basic economic questions are highly dependent on market behavior. Here, individual consumers and sellers interact to solve the economic problems.

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laissez-faire economy; free market

The market economic system is also referred as ________ or ________. 

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Mixed economic system

In this economic system, it is the combination of all the economic systems that has both private (market) and government (public) control. It means some things are owned and run by individuals or businesses, while others are managed by the government to make sure everyone’s needs are met.