Chapter 2 - Economic Systems Flashcards
What are the four economic systems/economies in the world?
Traditional
Command
Marky
Mixed
What is a traditional economy?
An economic system in which production, investment, prices, and incomes are determined by rituals, habits, customs, and beliefs
What groups of people normally use traditional economies?
Rural and farm based countries. Indigenous people
What are the advantages of a tradition economy?
Everyone knows what, how, and for whom to produce
What are the disadvantages of a traditional economy?
Tends to discourage new ideas and new ways of doing things. Also it creates a lack of progress.
What is a command economy?
An economic system in which production, investment, prices, and incomes are determined by a central authority. (King, dictator, state, government,etc.)
In a command economy who decides the what, how, and for whom?
The central authority
What is socialism?
A modern liberal version of the command economy
An economic and political system in which the government owns some but not all the factors of production and makes most/all of the economic decisions.
What are some examples of a command economy?
North Korea, Cuba, Venezuela, and Vietnam
What are the advantages of a command economy?
It can change direction drastically, allows people to receive some services they otherwise may not be bale to afford—Healthcare.
What are some disadvantages of a command economy?
Leaders provide for themselves at the expense of the general population. The loss of independent freedom to choose and a low quality and quantity of goods (shortages). Tax rates are high.
What is a market economy?
An economic system in which production, investment, prices, and income are determined and controlled by buyers and sellers (individuals) freely conducting business.
Who determines the what, how, and for whom in a market economy?
The consumers- people
What is the most powerful engine generating wealth the world has ever seen?
Capitalism
What are examples of a market economy?
Usa, australia, canada, great britain, etc
What are the advantages of a market economy?
Individual freedom, adjusts gradually to change over time, relatively small degree of government interference, and provides a wide variety of good and services, etc.
What are some of the disadvantages of a market economy?
Doesn’t provide for everybody and can have a high degree of uncertainty
What is a mixed economy?
An economic system blending elements of market, command, and traditional economies.
Wha are the advantages of a mixed economy?
Can take on the advantages of the other economies
What are some of the disadvantages of a mixed economy?
Can also take on the disadvantages of the other economies
What are some of the examples of a mixed economy?
Much of the Western Hemisphere— USA and Scandinavian countries
What is communism and who was its founder?
Karl Marx, and an ideological and social/political movement whose aim is to set yo a better version of society.
What is a communism society (in Karl Marx’s viewpoint) based on?
the common ownership of the factors of production and would not rely on social classes or money.
