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why the econoim system?
To determine how they use their limited resources effectively
Different types of economic systems
- Traditional economy
- Market economy (unplanned)
- Command economy (planned)
What is traditional economy?
Economy fund in under-developed countries
examples of of traditional economy:
- Pygmies of Congo
- Eskimos and Indian tribe
- Australian Aborigines
What is a Command Economy?
The government determines what, how and for whom goods and services are produced.
What are the two types of planned economy?
What is a Strong Command?
government makes all decisions (communism)
What is a Moderate command?
Some form of private enterprise, but the states of the major resources (socialism)
What is A Unplanned economy?
Also known as Free Market
Businesses and consumers decide what they will produce and purchase and how much.
- Production is determined by price.
Disadvantages and advantages
Advantages: Creates competition which leads to higher qualities of products and more choices.
Disadvantages: Big rift between wealth and poor
NOTE: A true market economy does not exist
What is a Mixed economy
- Combination of planned and unplanned economies.
- Government takes care or needs
- market takes care of wants e.g Australia, America, England
Advantage and disadvatage
Advantage:Balance of needs and wants are shared
Disadvantage: Citizens have to pay taxes
What is a Socialism economy?
Everything you own is controlled and owned by the state. (needs more than wants)
E.G Egypt, Syria, Tanzani, Sri Lanka
What a communism Economy?
Everyone has the same, goods are shared equally E.G Cuba, Vietnam, North Korea, Laos and China
What is a Fascism economy
Has complete power and led by a Dictator
E.G Germany (35-45) Italy (22-45) Spain (36-75)
What is a dictatorship?
A government that has complete power over a country or state. Practiced by one ruler
North Korea, Albania, Belarus, Cameroon, Chad, Zembabwe
What is a capitalism economy?
Everyone has the right to own, produce, and invest E.G Australia, America, England, China, Germany
The four questions for Production
- 1. What to produce
- 2. Who to produce
- 3. How to produce
- 4. How much to produce