Types of economic systems Flashcards
What is an economic system
A complex network of individuals, organizations, and institutions that allocate resources
What is a free market?
Resource allocation is mainly through the market mechanism
What is a command or planned econoy?
Resource allocation is mainly carried out through a government planning process
What is a mixed economy?
Both the market mechanism and the government planning process allocates significant proportion of total resources
How are resources allocated in the free market?
The price mechanism
How are resources allocated in the command market?
Government planning process
What is competition like in a free market? And in a command market?
Free-High
Command-Low
What is the income inequality like in a free market? And in a command market?
Free-High
Command-Low
How is the freedom of choice in a free market? And in a command market?
Free-High
Command-Low
How is the political freedom in a free market? And in a command market?
Free-High
Command-Low
