8.2 Economic Systems

Political-economy system: the combination of the economic and political systems of a country (defines how the economy and government interact with one another)

1. Capitalism: private citizens are free to go into business for themselves, to produce whatever they choose, and to distribute what they produce

2. Socialism: the government controls the use of the country's factors of production

3. Communism: extreme socialism in which all or almost all of the nation's factors of production are owned by the government

Interesting fact: Ten major companies control most of America's economy. The picture above shows how each company has several sub-companies that many of us buy products from.