Social Studies Economy

A “traditional” economy is based on what?

• Small local communities, families, and tribes

• Hunter and gatherer societies.

• A good example is “barter”: the exchange of goods or services for other goods or services without using money.

• A good example is your local grocery store.

A “command” economy is characterized by what?

• Government controls the country’s economy and makes all the decisions.

• The government owns the companies that make the products and decides what would be produced and how much.

• A good example are the economies of the communist countries of Cuba and North Korea.

• A good example are the economies of USA and England.

A “Market” economy is characterized by what?

• Decisions are made by individuals or the open market. And people choose freely what to buy and sell.

• Problems: owners of companies hold great wealth and economic power, Monopolies charge high prices and sell poor quality goods.

• People own the companies and the government is not involved.

• Government and central powers own the production companies.

A “Mixed Economy” is characterized by what?

• It is the most common and is a combination of “Command” and “Market” economies.

• Private ownership of companies with some government control.

• It is a combination of both “command” and “market” economies.

• Decisions are made by local communities and small tribes.

Mercantilism is characterized by what?

• Mercantilism is an economy run by a government for the purpose of building the wealthy and power of the country.

• The idea is for the country to sell more goods than what it buys. Making more money for itself and stoping free trade.

• It also puts limits on imports, which reduces choices and causes higher prices.

• Production is controlled by both private enterprises and the government.

Supply and demand is based on what?

• Supply is the amount of goods or services available for sale in the market.

• Demand is the amount of goods or services customers what to buy.

• Prices for the goods and wages for workers are set by the supply and demand.

• Prices for the goods and wages are set by the government.