is one whose economic decisions are made with great influence from the past.

Example: Mongolia

The essential characteristics of the traditional economy are: communal land ownership The leader decides on the management of agricultural production which is the basis of the economy. The production, distribution and use of the economic resources are based on traditional practices. New technologies are not welcome since they are in contrast with the traditional practices of their ancestors. The economy is only its third priority while culture and religion are its foremost priorities. Mines are used to gather raw materials for productions.

1. Traditional economy

-the factors of production and distribution are owned by state. -the citizens have little or no political or economic freedom.

2. Command economy

Example: Cuba and North Korea

The essential characteristics of a command economy are: Resources allocation is done by the government. Presence of central planning of all economic activities. There is no free competition. Only the government plays the role in setting legal framework for economic life production and distribution of goods and services. The product or needs of the people are distributed based priorities set by the committee.

-individual consumer and businesses interact to solve the economic problem determining a price of particular goods.
Example: Hongkong, France, Canada, Mexico, Singapore, Philippines, Peru and China

The essential characteristics of a Market economy are: The private sectors own and manage the means of the market. The price system in the market structure applies to determine how much it will be paid for a certain commodity or a service. It is also known as laissez-faire or free enterprise There is minimum government interference on decisions pertaining to the management of the economy There is presence of economic power.

3. Market economy

Five important areas: 1. Preserving competition 2. Preventing boom-and- bust cycle 3. Distributing income evenly 4. Producing public goods 5. Preventing pollution

3. Market economy

-it has the elements of traditional, command and free market which are presented with varying degrees.
Example: Japan, U.S.A. and Sweden

The essential characteristics of mixed economy are: The means of production are owned and controlled by the private sector as well as government. The people decide on economic activities within the economy. The combinations of the best feature of capitalist and command economies are observable in the market. The problem of distribution of goods and services and allocation of economic resources are determined through a combination of the market system and governmental laws and policies.

4. Mixed Economy

1. Capitalism
Is

an economic system in which most resources are privately own. It has three aspects: 1. The institution of private ownership is generally accepted. 2. Most people are free to pursue their own economic self-interests, that is, to work for personal gain. 3. They compete with one another to get ahead, to make a better product, to control markets in order to maintain or obtain a large profit.

2. Communism
Is an economic system in which the people themselves, not the government, own the means of production. No government or bureaucracy supervises what the people do.

It has three aspects: 1. The institution of private ownership is generally accepted. 2. Most people are free to pursue their own economic self-interests, that is, to work for personal gain. 3. They compete with one another to get ahead, to make a better product, to control markets in order to maintain or obtain a large profit.

3. Socialism
the government owns and operates the major industries of the country. the socialists hope to overcome capitalisms two important problems:

The unequal distribution of income and wealth. The uneven course of economic growth with periods of boom or bust.