1. 4. People create economic systems that influence individual choices and incentives

2. Traditional Economy Closely tied to the environment
Choices and Social roles determined by
Custom
Belief system
Status
Birth
Family
Gender

3. Planned (command economy)
The central government makes all decisions regarding the production and consumption of goods and services.
Planned economies are also called command economies

4. Market economy Individuals make decisions based on exchange or trade;
these choices determine what gets made and who consumes goods and services.
Market societies are also called free markets or capitalism

5. Mixed economy
Mixed economies combine elements of traditional, market, and planned economies

6. Nations rarely fit into a specific category
But can be placed on a continuum
between extremes

7. All decisions made by tradition or command
All decisions made by individuals in free markets