This is a neat, colourful document summarizing and explaining each economic system (planned, market and mixed economies). The characteristics, origin, advantages and disadvantages of each economy is clearly outlined. The notes also cover the global economy and an overall summary of the entire secti...
Economic systems
Market Economy
A system that a country chooses to allocate its resources and Businesses and
distribute its goods and resources. people control.
Economic Problem: how to meet the endless wants and needs
of people with limited resources.
1 2 3
Mixed Economy
PLANNED ECONOMY MARKET ECONOMY MIXED ECONOMY Government,
businesses and
An economic system in An unplanned A mixture of private
people control.
which the government economy in which land, and government
or worker’s council property and control of the economy.
make all the decisions businesses are owned The government, as
about the production by private people, not well as people and
and consumption of the government. businesses, owns the
goods and services, land and natural
based on their idea of resources.
what is good for all the
people of their country.
1
, Planned Economy
Characteristics
• Gov owns land & natural resources, land and farms
• Gov decides on what produced and how much sold for
• Gov decides who gets how much of whats produced
• No competition between goods and services businesses
• Do job able to do and get what need to live (eg; food)
• Dont choose what you do
• AKA; Command / Directed Economy
Origin
• Country needs too rapidly industrialise wartime economy
‣ e.g. Soviet Union’s planned economy originated in industrialization before WW1
‣ Too long to accumulate capital = gov allocates resources and takes control
• e.g. Cab, Libya, Saudi Arabia, Myanmar, North Korea, Iran
‣ China, India, Soviet Union used to
Advantages Disadvantages
• Stable (closed systems) • No entrepreneurship can limit growth
• Stimulate growth in industry - Don’t wait and innovation
for capital to be invested. Gov directs • No freedom of choice for consumers -
economic resources to specific areas. gov makes limited range of clothes and
• Gov directs economic resources where food available
needed • Inflexible systems = can’t adapt to
• Look after welfare of all citizens change quickly
• Focused on citizen’s welfare more than • No incentive to do jobs well
on profit and growth. • Difficult to motivate workers to excel
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