Section 5 kl term definition pros cons traditional

Section 5: KL
Term Definition Pros Cons

Traditional Economy Decision making by
custom
The 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
smoothly
The standard of living
of most people in
traditional economies
is very low. Families
do not earn enough
to do more than meet
their most basic
needs. They have
only limited access to
goods such as cars
or services like
medical care.
Market Economy Decision making by
individuals
Its efficiency at
meeting people's'
needs: When
demand for a product
rises, its price in the
market goes up. This
signals businesses to
produce more.
Instability: Periods of
growth and prosperity
in market economies
usually alternate with
recessions, or slow-
downs, in business
and employment.
Unequal distribution
of wealth: The market
divides wealth to
people according to
how society values
what they do.
Command Economy Decision making my
government planners
Central 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 economies
has been
disappointing
because the
government controls
wages and prices,
workers have little
incentive to work hard
or to produce high-
quality goods, and In
a command economy
is that government
planners, no matter
how well intentioned,
are less efficient at
making economic
decisions than the
market is.