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TRADITIONAL ECONOMY The basic economic decisions are made according to long-established ways of behaving.

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Characteristics Behaviors unlikely to change and passed from elders to youths Usually used by people who own their own resources- tribal hunters Tradition/customs answers the 3 major economic questions- What and how much to produce (game and enough to feed tribe) How to produce (tools and methods) Who gets the product (divided evenly, based on role in the hunt, role in the tribe) Freedom to make day to day decisions (hunt or gather)

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Where can you find it? Very few exist: Parts of central and South America, Africa, and Asia

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COMMAND ECONOMY The government or central authority owns/controls factors of production makes all basic economic decisions

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Characteristics Government usually in charge of transportation, communication, banking, and manufacturing (including job opportunities and wages) Central planning group makes decisions of how, what, and how much is produced. Government decides what is produced and what is purchased Who gets goods and services varies: only the rich or evenly divided Little individual freedom

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Where can you find it? Economic system principles have existed for thousands of years (Ancient Egypt to Soviet Union)

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Market Economy (Free Market) System in which private individuals make their own choices about production, distribution, and consumption.

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Characteristics All economic decisions made through bargaining (Free enterprise, buyers and sellers) No one person or group runs the market economy Individuals free to make decisions (Capitalism): - How to use land, labor, and capital - Choose to start own business - Choose own job/profession People who make more desirable products or earn higher wages---can buy more goods and services - Choose who will get what is produced Competition, profit, and investment are vital to success

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Where can you find it? The US economy is based on the Free Markets

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Mixed Economy A type of economy that combines elements of the 3 main types

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Characteristics Most common form of economic system today China: 1980s- still command economy 1990s started adding Free Enterprise Principles Today, China is still Communist but has some Free Enterprise Principles

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Characteristics The U.S. is considered Free Market- but has elements of a Command Economy Government Command of specific services: Education Mail National Defense Highways and Airports

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