UNIT 2: ECONOMIC SYSTEM Flashcards
How does the government influence the economy in market economy?
There is no direct government intervention but the G influences the economy through its economic policies.
What type of economic system does Vietnam have?
The economy of Vietnam is the multisector economy - the market economy under the G’s control.
What is a market economy?
Market economy is an economic system in which economic relations are regulated by the law of supply and demand. In this type of economy, companies can compete freely.
What is a planned economy?
Planned economy is an economic system in which economic relations are planned by the G, all production, distribution and consumption quotas are fixed by the G beforehand. In this type of economy, there is no real competition between companies and the private ownership does not exist.
What is a mixed economy?
Mixed economy is an economic system in which some goods are produced by the G and some goods by the private companies. So it lies between the market economy and the planned economy.
What are differences between a market economy and a planned economy?
Firstly, market economy is an economic system in which economic relations are regulated by the law of supply and demand while planned economy is an economic system in which economic relations are planned by the G, all production, distribution and consumption quotas are fixed by the G beforehand.
Secondly, in M.E, companies can compete freely but in P.E there is no real competition. In P.E, producers are not free to produce, in the other hand in M.E, producers are free to produce the highly demanded goods in order to maximize their profits.
