types of economies. traditional economy long established patterns of what is to be done. customs and...
TRANSCRIPT
TYPE
S OF
ECONOMIES
TRADITIONAL ECONOMY
• Long established patterns of what is to be done.
• Customs and rituals make choices!
• Retain economic positions of parents/grandparents.
• Tradition decides your fate (job)
MARKET ECONOMY
• Based on consumers and their buying decisions (rather than gov. control)
• Individuals decide how resources are allocated & goods distributed.
• Individuals decide what to consume.
• Pure market: Government is absent from economic affairs!
COMMAND ECONOMY
• Government controls ALL economic activity.
• State decides how to use/distribute resources.
• Example: Communism! Socialism!
• Market plays no role in production decisions.
MIXED ECONOMY• Combines SOME elements of Market and Command
economies.
• Decisions made in market by individuals but government ALSO plays a role in allocation/distribution of resources.
• Which country is an example of a mixed economy?
GOVERNMENTAL
THEORIE
S!
HO
W D
I D G
OV
ER
NM
EN
T C
OM
E T
O B
E? ?
EVOLUTIONARY THEORY
• State evolved from family!• Head of primitive family served as
the government authority!• Once families got too big, one
person took over to be the head • Example: Abraham’s descendants in
the Old Testament of Bible.
FORCE THEORY
• Born of force!• The state would not exist except for
the need to resist an enemy!! • So they were all brought together
(people in the same area) and were under the authority of one person/group.
DIVINE RIGHT THEORY
• Idea that certain people are chosen by a god/gods to rule! (Old theory!!)
• Ancient Egyptians, Chinese and Aztec’s believed this!
SOCIAL CONTRACT THEORY
• Idea that the government will provide protection, social order and services in exchange for payment and obedience of the people.
• All people have “natural rights” •Right to life, liberty and property !!