Which of the following best describes a traditional economy?

• A. An economic system that relies primarily on technological innovation and global trade.
• B. An economic system where the government makes all decisions about production and distribution.
• C. An economic system in which supply and demand determine prices and production decisions.
• D. An economic system where customs, traditions, and beliefs shape the goods and services produced, as well as the rules for their distribution.

Answer: (D)

Verified step by step guidance

1. Step 1: Understand the definition of a traditional economy. It is an economic system where customs, traditions, and beliefs influence economic decisions.
2. Step 2: Recognize that in a traditional economy, production and distribution are guided by historical patterns rather than market forces or government directives.
3. Step 3: Compare this with other economic systems: a market economy relies on supply and demand; a command economy relies on government decisions; and a mixed or modern economy may emphasize technological innovation and global trade.
4. Step 4: Identify that the key characteristic of a traditional economy is the reliance on established customs and social norms to determine what goods and services are produced and how they are distributed.
5. Step 5: Conclude that the best description of a traditional economy is the one emphasizing customs, traditions, and beliefs shaping economic activity.