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Economic Systems Explained
Transcript of Economic Systems Explained
Economic systems are the ways that the government distributes goods and services to the national community. There are four different types of economic systems which are traditional, command, mixed, and market.
This particular form of economic system is where the government controls the economy, sets prices, and determines which goods are to be manufactured and sold. A command economy is also known by the term a planned economy, because everything is controlled by the government in a dictator- like manner. Also, in a command economy, distribution levels are determined.
A mixed economy is based on free market capitalism, socialist institutions and state ownerships. Capitalism is when the trade and services of a country are controlled by private owners that obtain the profit instead of state. Additionally, entrepreneurs can do business as they please and the government will encourage them. Also, in a mixed economy the government will provide financial assistance to non profitable sectors such as, public schools. The most common advantages for a mixed market are consumers choice, which allows the buyer to be able to choose what he or she wants or doesn't want. Mixed economy's are mostly found in democratic areas including the United States, but this form of economy is what most countries have today.
This type of economy is based on the beliefs, cultures, and teachings of one's self or in a community of people who believe in the same thing. In a traditional economy of a settlement, people contribute to helping out the all the others in the group and vice versa. The downside of this type of government is the fact that the individual's financial income barely increases.
Economic Systems Explained
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Http://www.google.com/imgres?imgurl=http://www.econedlink.org/lessons/images_lessons/795_inuithunt1.jpg&imgrefurl=http://www.econedlink.org/s795&h=350&w=251&tbnid=7p4yNITI2NyBvM:&zoom=1&tbnh=160&tbnw=114&usg=__Jyiyke83JUHdu1Pt249tpPTGQTA=&docid=_XMytuD6ne. Digital image. Web.
Economic Stance of the World
A market economy is considered the opposite of a planned economy. A market economy that is based on the consumer's choices that will influence the outcome of a businesses economic decisions, the price of items and services and the general welfare of the country. Therefore, the main factor in a market economy is all about supply and demand. The consumers' demand for a specific good or service will determine how much and at what price the company will sell their product.
What are Economic Systems Continued
The History of Economic Systems
People have been dealing with economic issues, and buying and selling as far back as 100 centuries ago. Economies arose when humans began to tame animals and grow crops. They began to see the need of other people crops and goods, resulting in the development of a simple economy.
Before you can understand what economic systems are, you must know what an economy is. What is an economy? An economy is the management of resources and an individual, company, or government's use of money.
These four systems all take part in different ways to show what, how, and for whom the product will be created. Economic systems all take part in how and why the economy is in it's state as it is today.