Activity 4.1 Types of Economic Systems

Activity 4.1
Types of Economic Systems

While there are many terms that are used to describe the types of economies that exist in the world, most economists agree that there are four major types of economic systems.

You may remember that earlier in the course you learned about the factors of production. To better understand the 4 types of economic systems listed below, you may want to go back and review those factors of production by clicking on the arrow below.

TYPES OF ECONOMIC SYSTEMS
	Definition	Associated Terms	Examples in Practice
1) *Market economy*	An economic system in which individuals own and operate the factors of production.	Free enterprise Capitalism	United States Great Britain Japan
2) *Command economy*	An economic system in which the government owns and operates the factors of production.	Socialism Communism	Cuba China Laos
3) *Traditional economy*	An economic system based upon customs and traditions. Economy is based upon agriculture and hunting.	Non-Industrialized Agrarian societies	Chad Haiti Rwanda
4) *Mixed economy*	An economic system that has features of both market and command economies.	See note below concerning mixed economies.

In reality there are no pure market economies, nor are there any pure command economies. For example, even in the United States, where free enterprise reigns, the government plays a major role in the economy. Minimum wages, social security, and regulatory policies are examples of government involvement.

In China, for example, some private ownership of businesses is allowed, however the government still maintains tight control over the factors of production and prices.

While we could say that both the United States and China are mixed economies because they contain both market and command economic features, to do so would be misleading because the role that the respective governments play in the economy are quite different.

YOUR ASSIGNMENT:

After reviewing the above material on the four types of economic systems and the factors of production, please take the "Economic Systems Quiz".

	Activity 4.1 Economic Systems Quiz 25 Points
	Go to the Assignment Area to take the Economic Systems Quiz.