Economic Systems

There are 4 different economic systems in the world. These systems are how countries economies are run.

Before we begin we must know what supply and demand are.

What is supply? What people make

What is demand? What people want

Communist

This is an economic system in which the government controls the factors of production.

They make all decisions about use and distribution of income.

The government produces the goods or provides the services itself

The government owns everything!

Countries with Command Economies.

Cuba North Korea Former Soviet Union

Advantages

Only products that are required are produced, this prevents the production of some undesired products.

Distributes wealth equally.

Disadvantages

No monetary reward or incentive to become good at what you do.

Limit personal freedoms of your citizens.

The Government is not always the best at determining what people want.

Limited supply of products.

Free Enterprise Production and distribution of

goods and services are based on supply and demand.

People decide what to purchase and produce and how much to charge without government intervention.

Countries with Free Enterprise systems.

United States European Union/European Nations.

*There is no complete free enterprise system in the world

Advantages

It creates wealth. People have a choice.

Disadvantages

Sometimes there is unpredictable markets.

Socialist

Own many of the larger industries and provide education, health and welfare services while allowing citizens to make some economic choices.

Countries with these

Germany Canada

Advantages

Basic services are free. People still have choices and may

run their own businesses.

Disadvantages

Government has a say so in many things in your life.

If the government falls, so do your basic services.

Traditional Economic system

Family or Community based Economic System that relies on custom and ritual to make its choices.

Examples: Aborigines Amazon Tribes Any Subsistence Economy