Economic systems Flashcards
What are the 3 different types of economic systems?
Command economy, Free market economy, Mixed economy.
What is a command economy?
An economy where everything is decided by a central government with little to no input from the people. The government will decide the needs of the people, the best way to produce it and for everyone.
What is a free market economy?
An economy where it’s reliable on consumption choices made by consumers since they are the dictators of what’s produced, how much is produced and how much it costs.
What is a mixed economy?
An economy where there’s a mix of both private and public ownership and some government intervention in markets.
What are the advantages of a command economy?
1) Basic needs are taken care of.
2) Education and health cost very little if anything.
3) Very little unemployment.
What are the disadvantages of a command economy?
1) There are no incentives.
2) Doesn’t meet people’s wants.
3) No room for individuality.
4) New and different ideas are discouraged.
5) Requires a large bureaucracy.
What are the advantages of a free market economy?
1) Individual freedom for all.
2) Lack of government interference.
3) Big variety of products to choose from.
4) High degree of consumer satisfaction.
5) Encourages innovation.
What are the disadvantages of a free market economy?
1) Rewards only productive people.
2) Workers and businesses face uncertainty.
3) Unemployment.
What are the advantages of a mixed economy?
1) It allocates goods and services to where they have to go to.
2) It improves productive efficiency.
3) It promotes control equality.
What are the disadvantages of a mixed economy?
1) It doesn’t eliminate the possibility of monopolies.
2) It can sometimes leave the less competitive members of society without support.
3) The state/government has the power to change its mind on certain organisations e.g Royal Mail privatisation in 2013.
What are the 3 big questions for an economic system?
1) What?
2) How?
3) Who?
