Traditional EconomyDecision making by customThe production and distribution of food, clothing, and shelter is woven into the fabric of society. Economic activities do not need to be coordinated or regulated in any way by the government. Tradition and community values serve to keep the economy running smoothlyThe standard of livingof most people in traditional economies is very low. Families do not earn enough to do more than meettheir most basic needs. They have only limited access togoods such as cars or services like medical care.Market EconomyDecision making by individualsIts efficiency at meeting people's' needs: When demand for a productrises, its price in the market goes up. This signals businesses toproduce more.Instability: Periods of growth and prosperityin market economies usually alternate with recessions, or slow-downs, in business and employment. Unequal distribution of wealth: The marketdivides wealth to people according to how society values what they do.Command EconomyDecision making my government plannersCentral planners can ensure full employment by devising enough projects to absorb all members of the workforce. This ability, along with controls on prices, can bring stability to the economy. A command economy can also distribute income more equally than a market economy, because everyone shares in the nation's wealth.The performance of command economieshas been disappointing because the government controls wages and prices, workers have little incentive to work hardor to produce high-quality goods, and In a command economyis that government planners, no matter how well intentioned, are less efficient at making economic decisions than the market is.
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Government, Economic system, Presidential system, Form of government, Forms of government