Economic Systems
An economic system is a means of producing, distributing, and consuming goods and services. All economic systems have these three features.
There are three basic types of economic systems: capitalism socialism, and communism. What distinguishes one from the other is based upon the following factors:
The role of the government can either be high or low, depending on the industries and businesses it owns or controls. Economic freedom refers to the freedom of businesses or consumers to do what they want – it can either be a little or a lot of freedom. Private property refers to what people can own in the system. Lastly, since an economic system produces wealth, it must be decided how the wealth us shared. Wealth is either shared evenly or unevenly.
No country has a pure economic system. Instead it is best to think of countries as falling along a spectrum between a purely planned economy (communism) and an unplanned economy (capitalism).
There are three basic types of economic systems: capitalism socialism, and communism. What distinguishes one from the other is based upon the following factors:
- the role of the government
- economic freedom of individuals
- the amount of private property
- how wealth is shared or distributed
The role of the government can either be high or low, depending on the industries and businesses it owns or controls. Economic freedom refers to the freedom of businesses or consumers to do what they want – it can either be a little or a lot of freedom. Private property refers to what people can own in the system. Lastly, since an economic system produces wealth, it must be decided how the wealth us shared. Wealth is either shared evenly or unevenly.
No country has a pure economic system. Instead it is best to think of countries as falling along a spectrum between a purely planned economy (communism) and an unplanned economy (capitalism).
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