chapter 2 section 1 Flashcards
(27 cards)
what is an economic system?
an organized way of providing for the wants and needs of people
What are the four types of economic systems?
Traditional market, mixed and command
what is a traditional economy
It is an economic system where all economic activity stem from ritual habit or custom
what are the characteristics of traditional economy?
Habit and custom dictate most social behavior
People are not free to make decisions based on what they want
Rules are defined by the customs of their elders and ancestors
examples of countries with traditional economies
Central African Mbuti
Aboriginal Australians
And more indigenous peoples around the world
examples of countries with traditional economies
Central African Mbuti
Aboriginal Australians
And more indigenous peoples around the world
What are the advantages of a traditional economy?
everyone knows what roles to play
There is little uncertainty over what and how to produce
For whom to produce is determined by customs and tradition
What are the disadvantages of a traditional economy ?
it discourages new ideas and new ways of doing things
There is a lack of progress which leads to economic stagnation and lower standards of living
what is a command economy
It’s an economy, where central authority makes decisions about what how and for whom to produce
What are the characteristics of a command economy?
Government makes major economic decision decisions
Severely limits private property rights
Individual freedom is limited
Government officials tend to favor themselves
examples of countries with command economies
North Korea
Cuba
Former Soviet Union
what are the advantages of a command economy?
It can change direction drastically
Many health and public services are available to everyone at or no cost
What are the disadvantages of a command economy?
they ignore the basic ones and needs of consumers
They give people the incentive to put out their quotas instead of producing a good product
It requires a large decision making bureaucracy
Rewards for individual initiative
What is a market economy?
an economy where people make decisions in their own best interest
What are the characteristics of a market economy?
A great deal of freedom
People having free freedom have answer what to produce
Income that consumers earn determines for whom to produce
it features the private ownership of resources
It’s based on capitalism
what are examples of countries with a market economy?
United States
Japan
South Korea
Singapore
Australia
Great Britain
Parts of Western Europe
What are the advantages of a market economy?
individual freedom for everyone
Able to adjust to change gradually
Lack of government interference
Higher degree of consumers satisfaction
Variety of goods and services
Decision making is decentralized
what are the disadvantages of a market economy?
It does not provide for everyone
It may not provide enough of some basic goods and services
It has a high degree of uncertainty
What is a mixed economy?
An economy where they answer some of the questions of what how and for whom to produce
what are the characteristics of a mixed economy?
some mixed economies have a political system based on democracy and others do not
The more socialistic a country is the more it will make major economic decisions often with the claim that this is for the betterment of the people
If the government intervenes too much a mixed economy turns into a command economy
what are examples of countries with a mixed economy?
China
Norway
Cuba
North Korea
What are the advantages of a mixed economy?
it provides assistance to some people who would otherwise be left out
If the society has a democracy voters can use their electoral power to affect what how and for whom to produce
Those who are not as fortunate, get free or low-cost public housing, transportation, medical care, and education
what are the disadvantages of a mixed economy?
Costs for more services means higher costs for citizens
availability of services may be limited or the quantity may deteriorate over time
Less efficient than capitalism
Due to its inefficiency, many socialistic countries today allow more capitalist development
what are the three political systems?
Socialism
Communism
Capitalism
