Economic Systems

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Economic Systems by Mind Map: Economic Systems

1. Capitalism

1.1. Where?

1.1.1. United States

1.2. What?

1.2.1. Individuals own all or most of businesses and production

1.2.2. Government has no say to what the business sell, how much they charge for goods and services or where the products are made

1.3. Pros?

1.3.1. Consumers are free to choose the products they desire

1.3.2. Corporations have more incentives to be efficient and produce goods that are in demand

1.3.3. Corporations have more incentives to be efficient and produce goods that are in demand

1.3.4. The economy is more likely to grow as businesses are seeking to invest more and work harder

1.3.5. Cons?

1.3.5.1. Privately owned businesses and suppliers can demand high prices for goods and services they offer

1.3.5.2. Corporations are less concerned about the external factors affected by the business

1.3.5.3. Businesses that possess monopsony power are able to pay employees at a much lower wage

1.3.5.4. The economy is more likely rise and fall with recessions and mass unemployment

2. Socialism

2.1. Where?

2.1.1. Sweden

2.2. What?

2.2.1. Some if not most business are owned by the government so that they can control how things are distributed to individuals

2.2.2. Entrepreneurs can own smaller business and people are taxed in a high bracket to put funds back into programs

2.3. Pros?

2.3.1. All citizens have access to education and health care

2.3.2. Classes of society are not recognized because everyone is considered to be equal

2.3.3. The government monitors, controls and owns companies to help regulate prices charges in hopes of making services more affordable to the people

2.3.4. Taxes are based solely on income

2.4. Cons?

2.4.1. Most control is given to the government and citizens have less input or options

2.4.2. The tax rates are much higher since the government has to be able to offer services at much lower costs or even free

2.4.3. The monies never seem to make it to those in poverty which in turn does not improve the standard of living for the majority

2.4.4. Workers do not work as hard because they know either way they are going to get paid

3. Communism

3.1. Where?

3.1.1. North Korea

3.2. What?

3.2.1. An economic and political system where the government owns and controls almost everything

3.3. Pros?

3.3.1. The idea is that everyone has the ability to build a life for themselves

3.3.2. Nearly everyone is employed in some facet

3.3.3. Most everyone is offered a change to receive higher education, though the subjects may be limited

3.3.4. Manufacturing and agriculture are the two industries that are primarily focused on

3.4. Cons?

3.4.1. People are restricted on pursuing their own dreams, they work for the common goal and needs of the country

3.4.2. Earning caps are placed on jobs make innovation harder to achieve because individuals do not want to work harder than they have to

3.4.3. All monies belong to the community and people are not allowed to save money

3.4.4. Communism generally leads to poverty for most individuals

4. Mixed Economy

4.1. Where?

4.1.1. Germany

4.2. What?

4.2.1. An economic system that combines private business ownership and limited government control

4.3. Pros?

4.3.1. The government has less control over the people

4.3.2. Most business are privately owned which allows them to be more innovative and have the ability to cut costs where they see fit

4.3.3. Businesses are able to award employees based on their hard work

4.3.4. Poverty is less likely to occur since people are able to be compensated beyond the control of the government

4.4. Cons?

4.4.1. Taxes are much higher in a mixed economy because the government has to invest more money into the economy

4.4.2. Companies are limited on how they can grow and may have to pay higher taxes

4.4.3. The government poorly manages the economy and can easily overstep their place in private businesses because there is no clear role of the government

4.4.4. It is hard for a mixed economy to find a balance between market freedom and equality in wealth

5. Why is it important?

5.1. Determines how income is distributed to society

5.2. Determines how much or how little the government is involved with businesses

5.3. Determines how income is distributed to society

5.4. The goal is to prevent market failure and poverty