Economic Systems - created from Mind Map

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Capitalism

Socialism

Communism

The United States

Importance

Capitalism is an economic and system in which a country's trade and industry are controlled by private owners for profit, rather than by the state. The production of goods and services in this system are determined by supply and demand.

An Example of a capitalist economic system is the United States.

pros

Allows competition to provide goods and services

cons

Consumers are free to choose the products that they desire

Incentives to be rich encourages innovation

Leads to inequality

Firms can gain monopoly power and exploit consumers

Externalties can be damaging to the environment

Socialism is an economic theory that supports collective or governmental ownership and administration of the means of production and the distribution of goods. In a socialist society means of production are owned by the state.

Cuba is an example of a socialist nation. Cubas economy is state run and it lacks a stock exchange.

pros

Cons

All members share equal benefits

Wealth is distributed equally

All members survival needs are met

There is social equality

No competition

Deprives people of the freedom to provide for themselves

Lack of motivation to work harder

Communism is a economic system where all the property is public and the government owns and controls the manufacturing and transportation industries. People share equally from the benefits of labor and they receive the things they need from the government.

An example of a country with a communist economic system is China. The government controls the manufacturing industry that profits for the government through consumer goods

Pros

Cons

The government covers basic needs

Guaranteed employment

Guaranteed Education

Limited freedom

No individual rights

No monopolys

The United States has a mixed economy. The most common characteristic of the American economy is free market. The United States has the freedom to buy, sell, and produce in a competitive environment. The U.S. economic system also has some elements of government regulation.

Economic systems are the means by which countries and governments distribute resources and trade goods and services. Economic systems are important because they contribute to the development of public policies, such as health care, welfare, and school reform. They stand to reduce inequality, pollution and crime. They are also used to control the five factors of production, which includes labor, capital, entrepreneurs, physical resources and information resources.