Market Economy

A system in which individual buying decisions in the marketplace together determine what, how, and for whom goods and services will be produced.

Command Economy

A system in which a central planning authority, under the control of the country's government, owns most of the factors of production and determines what, how, and for whom goods and services will be produced.

Mixed Economy

A system that uses aspects of a market and command economy to make decisions about what, how, and for whom goods and services will be produced.

Chapter 8.2 Economic Systems

Socialism

A system in which the government controls the use of the country's factor of production. How scarce resources are used to satisfy the many wants of people is decided, in part, by the government.

Capitalism

The system in the United States, which operates in democracy. A system in which private citizens are free to go into business for themselves, to produce whatever they choose to produce, and to distribute what they produce.

Communism

It is an extreme form of socialism, in which all or almost all of a nation's factor production are owned by the government.

More political freedom -> more economic freedom