Economic systems Flashcards
What are the three major economic systems?
The three major economic systems are planned economy, market economy, and mixed economy.
What is an economic system?
An economic system is a system that a country chooses to allocate its resources and distribute its goods and resources.
What is the economic problem?
The economic problem is how to meet the endless wants and needs of people with limited resources.
What is a planned economy?
A planned economy is an economic system in which the government or workers’ councils make all decisions about the production and consumption of goods and services.
What are the characteristics of planned economies?
In planned economies, the government owns land, natural resources, factories, and farms. People are not allowed to own property, and the government decides what should be produced and how much it should be sold for.
What are the advantages of planned economies?
Advantages include stability, government-directed growth in industry, and welfare for all citizens.
What are the disadvantages of planned economies?
Disadvantages include limited economic growth and innovation, lack of consumer choice, inflexibility, and difficulty in motivating workers.
What is a market economy?
A market economy is an unplanned economy where land, property, and businesses are owned by private individuals.
What are the characteristics of a market economy?
In a market economy, businesses aim to make a profit, entrepreneurs decide what to produce, and workers can choose their jobs.
What are the advantages of market economies?
Advantages include flexibility, consumer choice, rewards for innovation, and economic growth.
What are the disadvantages of market economies?
Disadvantages include wealth inequality, focus on profit over welfare, potential for consumer harm, and excessive control by big businesses.
What is a mixed economy?
A mixed economy is a combination of private and government control of the economy.
What are the characteristics of a mixed economy?
In a mixed economy, entrepreneurs decide what to produce, and the government regulates certain economic activities.
What are the advantages of mixed economies?
Advantages include combining government and private businesses for economic growth and promoting competition while protecting citizens.
What are the disadvantages of mixed economies?
Disadvantages include potential bureaucratic inefficiencies and limited economic growth due to government welfare allocations.
What is the global economy?
The global economy is the economy of the world formed by interlinked national economies that affect each other.
How does the global economy interact with national economies?
The global economy is a way in which countries’ different economic systems interact, with the world’s strongest economy influencing it the most.
