Introduction to economic system

This type of economy is most commonly found in communist countries. Mixed economies are widely considered an economic ideal nowadays. In those cases the government steps in to regulate the resources and most processes surrounding them. In a Nutshell There are four types of economic systems; traditional, command, market and mixed economies.

If a man does not have livestock in such societies, he usually cannot trade for high prestige items nor can he get married since animals must be given as the bride price.

This is like getting a very high interest rate on money in a bank. For example, many governments pass laws to regulate monopolies or to ensure fair trade and so on.

The result is greater economic independence for young men. Large parts of the world still qualify as traditional economies. Market Economic System A market economic system relies on free markets and does not allow any kind of government involvement in the economy.

It is clear that the introduction of general purpose money has had a powerful effect on previously isolated small-scale societies. Economies that have access to large amounts of valuable resources are especially prone to establish a command economic system.

He can then use them to pay a bride price. However, this is unfortunately not always the case.

The Four Types of Economic Systems

The extent of government control varies greatly and some governments tend to increase their power more than necessary. When general purpose money is introduced into an economy that previously only had special purpose money, the effect most often is dramatic for the social order.

In fact, it usually results in less self-sufficiency. Thus, neither the private nor the government sector alone can maintain the economy, both play a critical part in the success of the system. Cattle--a form of special purpose money among traditional East African pastoralist tribes Traditional pastoralists commonly measure wealth in terms of numbers of livestock.

In theory, they are supposed combine the advantages of both command and market economic systems. A command economic system is characterized by a dominant centralized power. It facilitates trade and gives individuals the ability to accumulate wealth.

Using animals as currency has distinct disadvantages and advantages. Animals can die of diseases and must be actively cared for and guarded.

Mixed Economic System A mixed economic system refers to any kind of mixture of a market and a command economic system. Other parts, such as agriculture are often left to be regulated by the general population. Although there is no clear-cut definition of a mixed economic system, in most cases the term is used to describe market economies with a strong regulatory oversight and government control in specific areas e.

In addition to that, it also ensures that the economy and the government remain separate.

The continuing obligation to pay off such loans reinforced the traditional authority of older men and the dependence of younger men. As a result, he will not be in financial debt to his elder kinsmen.

In these pastoralist societies in the past, young men had little hope of obtaining wealth before they were in their early middle age.Introduction There are vast differences between the economies of isolated, small, self-sufficient societies and large-scale ones that are integrated into the modern system of global commerce.

These differences are not only in terms of the scale of the economies. is an economic system in which people produce and distribute goods according to customs handed down from generation to generation.

Command Economy is an economic system in which the government makes all the economic decisions. An economic system may involve production, allocation of economic inputs, distribution of economic outputs, firms, and the government to answer the economic problem of resource allocation.

There are two general subtypes of economic systems: free market systems and planned systems. In theory, a market economic system enables an economy to experience a high amount of growth.

Arguably the highest among all four economic systems. In addition to that, it also ensures that the economy and the government remain separate. Introduction Economic systems are organized way in which a state or nation allocates its resources and apportions goods and services in the national community.

An economic system is slackly defined as country’s plan for its services, goods produced, and the exact way in which its economic plan is carried out. An economic system is a mechanism (also defined as system or social institution) which deals with the production, distribution and consumption of goods and services in a particular society.

The economic system is composed of people, institutions and their relationships. It addresses the problems of 5/5(1).

Introduction to economic system
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