Social Studies - 2017-18

GOVT.14b - Economic Systems

The student will apply social science skills to understand economic systems by 

b) comparing the characteristics of traditional, free market, command, and mixed economies, as described by Adam Smith and Karl Marx;  

Adopted: 2015

BIG IDEAS

UNDERSTANDING THE STANDARD

The type of economy a country has is determined by the amount of government involvement in economic decision making.

ESSENTIALS

Traditional economy 

 Economic decisions are based on custom and historical precedent. 

 People often perform the same type of work as their parents and grandparents, regardless of ability or potential. 

Free market economy 

 A free market economy is characterized by private ownership of property/resources, profit motive, competition, consumer sovereignty, and individual choice. 

 Adam Smith was one of the founders of free market capitalism. 

Command economy 

 A command economy is characterized by central ownership of property/resources, a centrally planned economy, and lack of consumer choice. 

 Karl Marx provided the ideological foundation for communist/centrally planned economies. 

Mixed economy 

 Individuals and businesses make decisions for the private sector. 

 Government makes decisions for the public sector. 

 Government’s role is greater than in a free market economy and less than in a command economy. 

 Most economies today are mixed economies.

KEY VOCABULARY

Updated: May 17, 2017