Economic Sytems

Economic Sytems

1. The traditional economic system is based on goods, services, and work by the people, who depend on agriculture, fishing, hunting, and gathering, This system relies on the people of the community with very little labor division and typically will trade resources instead of using money.

   • You can find the traditional economic system to be found in rural settings in second- and third-world nations, like Africa and the Middle East, where economic activities are predominantly farming or other traditional income-generating activities. Typically there aren't a lot of resources to share with other communities and the resources they do have do not occur naturally; that is why a lot of the work goes in the system by the people. In addition, the traditional economic system does not create a surplus.
   • Some of the pros of having a traditional economic system are each person has a role and works harder because each person has a contribution toward production and typically the economic system is more eco-friendly since they don't rely on technology to destroy the earth. Some of the cons are they rely on the earth and with the climate change this could have a negative effect on their resources.

2. The commands economic system is a dominant and centralized authority, which is usually controlled by the government. The government controls a significant portion of the economic structure and determines what is produced, how it is produced, and how it is distributed. This type of economy is often referred to as the communist economy.

   • One of the biggest signs to look for to see if a county is command economic is when the country has a lot of access to different resources. If this is the case the government will have control over the resources. Typically the people only have control of less important resources like farming while the government controls the gold and oil (for example). One of the most known countries to follow this economy in North Korea and China, but China have moved away from such a government-controlled economy.
   • Some of the pros of a command economic system are since the government has such control over everything the country tends to have low levels of inequality and unemployment. Also, the country will be offered incentives by the government; free healthcare to the people. However, some of the cons of the command economy are lack of motivation from the people since the government is in control of everything. Also, there is a lack of competition between the companies and often experience higher prices.

3. Market economic systems are based on the concept of free markets, meaning the people have more control while the government has very little interference. The people will make changes as necessary with the selling of resources based on supply and demand.

   • The people have more control in this type of economic system and typically the government only sets laws to help with fair trade and restrict monopolies. Several different countries follow the market economy because of the free flow of goods and services facilitates. Austrailia is an example of who follows this economy.
   • There are several pros to the market economy. There is always an abundance of resources for the people, the markets offer employment opportunities for the community and high motivation for business owners because of the competition. However, there are also several cons that come from the economy too. With so many competitors, the products can be of poor quality, not eco-friendly due to manufactures, and can sometimes lead to high prices that have skyrocketed.

4. Mixed systems combine the characteristics of the market and command economic systems. Mixed systems combine the best features of the market and command systems.

   • The mixed economy system has control by both the government and the people; they share the control. Both control the owning, making and selling, and exchanging of goods and resources. The United States is the most known country that has a mixed economy.
   • One of the best advantages of having a mixed economy is the fact that people have more power, are not restricted to how much they can make, and it adds to making the economy grow. Though there are some disadvantages to due to paying taxes and economy rescission can ruin a business.

5. Economic systems are important to have because of the regulations put on countries to control resources and trade. The economics are used to control the production, resources, and prices which is usually monitored by the government. Without economic systems, some countries would not be able to survive and it restricts others from taking over and doing what is best for the country and its people.

   • Market Economy, Its Characteristics, Pros, and Cons, with Examples(2019). Retrieved from https://www.thebalance.com/market-economy-characteristics-examples-pros-cons-3305586
     • What is an Economic System?(2019). Retrieved from https://corporatefinanceinstitute.com/resources/knowledge/economics/economic-system/
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