Traditional Economy (survival)
- Economy based on customs & history
- People do what their ancestors have done
- Ex. Inuits, ancient tribes
Free Economy (consumer based economy)
- Private property
- Profit driven
- Competition
- Consumer Sovereignty (power)
- Individual Choice
- Minimal Gov’t involvement
- Ex. Australia
Command Economy (gov’t based economy)
- Gov’t owns property
- No Competition
- No Individual Choice
- Gov’t makes all decisions
- Lots of Gov’t involvement
- Ex. North Korea, Cuba (rare)
Mixed Economy (both free and command)
- Individuals & biz make choices (private sector)
- Gov’t makes choices (public sector)
- Gov’t involvement (free < mixed < command)
- Ex. USA (most common economy)
The difference between economies = Gov’t Involvement
