Economic systems

Tradition-based economic system

THE MIXED ECONOMY SYSTEM

CAPITALISM AND THE FREE MARKET SYSTEM

AUTHORITY: THE CENTRAL PLANNING SYSTEM (comunism)

economi in the past

Economy in the present

based on :

customs

laws

beliefs

Feudal Europe

formed guilds

regulated and established rules of production

Tradition economy

economy is constantly changein

due the tecnological inovations

preserving the economy

production was strictly defined by rules

the products obtained for livestock

were sold in cities

only some grups:

economic activities are still based on tradition

Arctic Circle, the Amazon, Africa, Southeast Asia and Oceania

very limited economic growth

self-consumption and subsistence.

Principes of traditional economy

consume the things that they produced

self-sufficiency

purchase very few goods

Capitalism

Is a socioeconomic system:

Investment of capital

economic agents

Private ownership

decided what to produced

throught the free Market

the people how they have:

they own goods(car, hause...)

they own money

on the economy

to maximise they profits

Free market:

Supply: the products for a specific price.

Demand:

Price: the value assigned

The perople how want to buy a product

Price decreasd:

Price increased:

If the supply is high but the demand is low

If the demand is high but the supply is low

Competition among economic agents

Producing a product

Paying

Lowest possible price

lowest possible cost

This is the teory

but the supply side desires the greatest profit.

this create inecualities

free market system,

the interaction between supply and demand

determines the decision on what to produce.

generally represented by the state

China and Russia were the most important

the objective

is get a soccial equality

prevent injusticies

the state determine which goods or services:

how to produce

who to produce them for

they should produce,

very complicated bureaucracy.

Today, only North Korea continues to follow

China, Vietnam, Laos, Cuba and Belarus have implemented reforms

how?

the objetive

Countries with a mixed economy include:

Iceland, Sweden, France, the United Kingdom, the United States and Russia

avoid negative effects of the unequal distribution of wealth in a free market

avoid lack of efficiency in authority-based systems

free market deals with basic economic problems

the state acts as an authority to help guarantee equal opportunities.

collects taxes

The taxes money:

in public goods and services

social security benefits and other kinds of support.

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