Economic systems Flashcards
Define Traditional Economic Systems and give examples
> Based on customs & traditions. Allocations of scarce resources stems from ritual,habit or customs.
Barter means trade (no money is used)
E.g Africa, Aborogines, Inuits
Advantages of traditional
> Economic roles are set
Stable,predictable & continous
Disadvantages of traditional
> Discourages new ideas
Lack of progress
Lower standard of living
3 big questions. What? How? Who?
> What? whatever tradition, values & rituals dictate
How? however tradition, values & rituals dictate
Who? whoever tradition, values & rituals dictate
Define Command economy. Give examples
> A central authority (government) answers the 3 questions
E.g North Korea, Cuba , China
Advantages of command economy
> Basic needs are taken care of
Education, healthcare, other services cost very little if anything
Very little unemployment
Disadvantages of command economy
> Doesnt meet wants
No incentives
Requires a large bureaucracy
New & Different ideas discouraged
No room for individuality
Define Capitalism/Market Economy. Give examples
Consumers dictate what is produced, how much is produced & how much things cost
E.g Canda, South Korea, Singapore, Germany
Advantages of capitalism economy
> Individual freedom for all
Lack of government interference
Incredible variety to choose from
High degree of consumer satisfaction
Disadvantages of capitalism economy
> Rewards only productive people
Workers and businesses face uncertainty(competition)
Not enough public goods(Education,Health,Defense)
Unemployment
3 big questions of capitalism economy
> What? whatever consumer
How? entrepreneurs will respond to demand
Who? whoever is willing to work for it
Mixed economy definition and examples
> A mix of all the other three economies
E.g United states, Obama Care, Bail outs yet customer driven
