Economic Systems Flashcards
What is a market economy?
Businesses decide what to produce based on supply and demand. Price determines who gets what resources. Produce below the line. Eg) Hong Kong, Singapore
What is a command economy?
Government makes all the decisions. Government decides what to make, how to make it and whom to make it for. Goverment decides costs of goods and services. Most property owned/controlled by the government. Produce on the line. Eg) China, North Korea
What is a traditional economy?
People make what they’ve always made. People follow traditional customs. Produce on the line. Eg) Aboriginal people, The Inuit Tribe
What is a mixed economy?
Businesses decide what to produce based on supply and demand and the incentive to make a profit. The government regulates some industries. Elements of command and market. Property is owned by citizens. Produce economic growth. Eg) USA, Australia, UK and New Zealand.
What are the pros and cons for a command economy?
Pros - Each person knows their roles, simple to decide, economic direction can change very quickly
Cons - Discourages new and innovative ideas, low standard of living, does not meet and wants and needs of people, no incentives for people to work hard, day to day problems with the economy are not dealt with
What are the pros and cons for a market economy?
Pros - A great deal of freedom, can adjust to change over time, little government interference, freedom of workers, equal access to information, a large variety of goods and services
Cons - Competition, cant work = cant support themselves, unemployment, poverty, income inequality, crime rates
What are the pros and cons for a traditional economy?
Pros - Small communities, people have set roles, work to support the entire group, based on customs rituals and habits
Cons - Roles never change, not able to cope with natural disasters, low standard of living, slow to adopt new technology
