Types of Economies (with definitions)

Question 1

What does traditional economy mean

Answer 1

Traditional economy: economic decisions based on how economic activity has been carried out in the past.

Question 2

What does command economy mean

Answer 2

Command economy: government makes all economic decisions and owns or controls all the factors of production.

Question 3

What does market economy mean

Answer 3

Market economy: economic decisions made by people looking out for their own best interests.

Question 4

What does mixed economy mean

Answer 4

Mixed economy: primarily market economies but with features of traditional and command systems. Businesses are largely free to operate as they please, but must obey government rules and laws.