Types of Economic Systems

Master economic systems: command, market, traditional, and mixed! This worksheet clarifies how societies decide what to produce.

Fill in the blanks with the correct terms provided by the word bank. Be sure to go back and reread to make sure what you put in the blanks makes sense! Traditional EconomyIn a traditional economy, the customs and habits of the past are used to decide what and how goods will be produced, distributed, and consumed. In this system, each member of the society knows early in life what his or her role in the larger group will be. Since jobs are handed down from generation to generation, there is very little change in the system over time. In a traditional economy, people are depended upon to fulfil their traditional role. If some people are not there to do their part, the system can break down. Farming, hunting and gathering, and cattle herding are often a part of a traditional economy. There are no examples of a traditional economy in Europe. Fill in the blanks with the correct terms from the word bank. Be sure to go back and reread to make sure what you put in the blanks makes sense! Command EconomyIn a command economy, government planning groups make the basic economic decisions. They determine such things as which goods and services to produce, the prices, and wage rates. Individuals and corporations generally do not own businesses or farms; these are owned by the government. Workers at a business are told what to produce and how much to produce in a given time. The expectation is that everyone in the country will be able to have the goods they need when they need them. The former Soviet Union was an example of a command economy. After it collapsed in 1991, the new Russian Federation adopted a more mixed economy. However, the Russian economy is still less free than most other European countries. The government owns many of the large businesses and has many limits on private ownership. Fill in the blanks with correct terms from the word bank. Be sure to go back and reread to make sure what you put in the blanks makes sense! Market EconomyIn a market economy, decisions are guided by changes in price that occur between individual buyers and sellers in the marketplace. Other names for market system are free enterprise and capitalism. In a market economy, individuals or corporations generally own businesses and farms. Each business or farm decides what it wants to produce.Most of Europe operates as close to a market economy as possible. The United Kingdom has a mixed economy that is closer to market economy. It is considered one of the most free economies in Europe. "Free" means that businesses can operate without too many rules from the government. People are free to start a business and can do so quickly. Courts use the laws of the UK to protect the property rights of citizens. Fill in the blanks with terms from the word bank. Be sure to go back and read the passage to make sure your answers make sense. Mixed EconomyThere are no pure command or market economies. All modern economies have characteristics of both systems and are called mixed economies. However, most economies are closer to one type of economic system than another.In a truly free market economy, for example, the government would not be involved at all. There would be no laws to protect workers from unfair bosses. There would be no rules to make sure that credit cards were properly protected. Many societies have chosen to have some rules to protect consumers, workers, and businesses. These rules reduce the freedoms that businesses have, but they also protect the workers and consumers. In the United Kingdom, who decides which goods will be produced and sold? citizens the monarch business owners the prime minister Which country owns most of the large and important industries within its borders? Germany Russia United Kingdom None of these Which is least likely to be found in Europe? capitalism market economy command economy traditional economy