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Types of Economies

Types of Economies. Command Economy. Strong government control Government controls all means of production (land, labor, and capital) Government decides: What to produce How much to produce Goods distributed to people on an as-needed basis. Capitalistic Economy.

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Types of Economies

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  1. Types of Economies

  2. Command Economy • Strong government control • Government controls all means of production (land, labor, and capital) • Government decides: • What to produce • How much to produce • Goods distributed to people on an as-needed basis

  3. Capitalistic Economy • Also called a Free Market Economy • Very little government control • No governmental permission needed to start your own business • Consumer-driven

  4. Capitalistic Economy cont. • Supply and Demand • Free market economy is driven by supply & demand • Sets prices of goods and services • Supply goes up, prices go down • Demand goes up (supplies are down), prices go up

  5. Mixed Economy • Combines elements of Command and Capitalistic Economies • Has both privately and publicly-owned businesses

  6. Review Questions • What is the driving factor in a Capitalistic Economy? • What three things make up the means of production? • What is another name for a Capitalistic Economy? • How much control does the government have in a Command Economy? • Why does the U.S. lean more towards a Mixed Economy?

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