ECONOMIC SYSTEMS

ECONOMIC SYSTEMS
ECONOMIC SYSTEMS
ECONOMIC SYSTEMS
ECONOMIC SYSTEM
- a system of production, resource
allocation and distribution of goods and
services within a society or a given
geographic area.
The Four Types of Economic Systems

1. Traditional Economic System

2. Command Economic System

3. Market Economic System

4. Mixed Economic System

The Four Types of Economic Systems

1. Traditional Economic System

 focuses exclusively on goods and services
that are directly related to its beliefs,
customs, and traditions.
How do Traditional Economies answer
the three basic questions?
Who decides what to produce ?
- People follow their customs and make only what is
needed to take care of oneself.
Who decides how to produce goods & services?
- People grow & make things the same way that their
ancestors did.
For Whom are the goods & services produced for?
- Self and trading purposes (people in the village who
need them).
The Four Types of Economic Systems
2. Command Economic System
 is characterized by a dominant centralized
power (usually the government) that controls a
large part of all economic activity. This type of
economy is most commonly found in
communist countries.
Also known as Centrally Planned Economy.
Advocate by Karl Marx.
North Korean leader Kim Jong-un
How do Command economies answer
the basic economic questions?
1) What to produce?
Whatever the government says to produce.
2) How to produce?
 However the government tells you to produce.
3) For whom to produce?
 For whomever the government tells you to produce
(ideally the entire society).
The Four Types of Economic Systems
3. Market Economic System
relies on free markets and does not allow any kind of
government involvement in the economy. In this
system, the government does not control any
resources or other relevant economic segments.
Also known as laiseez faire economic.
Advocated by Adam Smith.
How do market economies answer
the three basic questions?
1)What to produce?
Whatever people need and want .
2) How to produce?
However companies decide to produce their
product.
3) For whom toproduce?
For whomever wants to purchase their product.
MIXED ECONOMY
4.MIXED ECONOMY
System refers to any kind of mixture of a
market and a command economic
system. It is sometimes also referred to as
a dual economy.
Advocated by John Maynard Keynes.
How do mixed economies answer
the three basic questions?
1.)Who decides what to produce?
businesses .
2.)Who decides how to produce goods and
services?
Businesses, but the government regulates
certain industries.
3.)Who are the goods and services VA produced for?
Consumers.
INSTITUTIONS OF THE PREVAILING
ECONOMIC SYSTEM
Economic Institutions
-are laws, common practices and a
company or an organization that
deals with money or with managing
the distribution of money, goods, and
services in an economy.
THANK YOU

HOPE YOU LEARN A LOT ! 