Economic Systems

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Economic Systems by Mind Map: Economic Systems

1. Prices have nothing to do with supply and demand since there is no free market.

2. Shortages occur on food and clothing since the government just guesses on what is needed.

3. Mixed Economy is when both the market and the government takes part in the economic system.

4. ` People in a socialist economy work where they are good at and enjoys. If society needs a job did that is undesirable it will offer high compensation to make it worth it. Natural resources are preserved for the good of the whole.

5. Capitalism

5.1. Capitalism , according to Nickels, McHugh, & McHugh, is "an economic system in which all or most of the factors of production and distribution are privately owned and operated for profit (2013)."

5.2. According to the 2017 Economic Freedom of the World Index, the number one capitalist country is Hong Kong.

5.3. Pros

5.3.1. Best products for good prices because consumers pay more for what they want the most. Prices can be kept low because of the competition between businesses.

5.3.2. The companies make their products as easy as possible so the company can maximize their profit.

5.3.3. Businesses can own their business and land.

5.3.4. There are free trade and the profit of motive for economic growth.

5.3.5. There is a lot of incentive to work hard because profits are the owners.

5.3.6. Typically workers are rewarded for their high productivity.

5.3.7. A variety of goods and services and barely any scarcity or oversupply because of the supply and demand control in the market.

5.4. Cons

5.4.1. Doesn't provide for people who lack competitive skills, for example, the elderly, children, developmentally disabled, and caretakers.

5.4.2. Inequality is the best interest of capitalism because they have fewer competitive threats.

5.4.3. They use their power to rig the system by making barriers for entry.

5.4.4. Inequality will limit diversity and the greatness it creates. Being diverse businesses can understand the needs of society's minorities, and meet their needs.

5.4.5. Ignores external costs like pollution and climate change. Which over times lowers our quality of life.

6. Communism

6.1. Communism, according to Nickels, McHugh, & McHugh, is, "an economic and political system in which the government makes almost all economic decisions and owns almost all the major factors of production (2013)".

6.2. Some examples of communist countries are North Korea and Socialist Republic of Vietnam.

6.3. Pros

6.3.1. In a communist economy can build things quickly, for example, Russia built up a military to defeat the Nazis and then quickly rebuilt the economy after World War II.

6.3.2. Communistic economies move fast to achieve imperative social goals.

6.4. Cons

6.4.1. The government has all the control.

6.4.2. There is no inspiration to work hard since business people have no incentives.

6.4.3. Most communist countries are run by fear.

7. Mixed Economy

7.1. Some examples of mixed economies are Germany and the United States of America.

7.2. Pros

7.2.1. Businesses can own their business and land.

7.2.2. Has all the advantages of a market economy like capitalism because it distributes goods and services where they are needed.

7.2.3. A balance between freedom and equality. Incentives are similar to capitalism.

7.3. Cons

7.3.1. Scarcity and oversupply may be caused by the government getting involved.

7.3.2. Some restrictions on freedoms and religions.

7.3.3. Can take on the disadvantages of the other types of economies depending on which economy it is mixed with.

7.4. I think that the United States falls under this category because we are not fully a capitalistic economic system. It is important to have some kind of economic system so there is no recession or depression.

8. Socialism

8.1. Socialism : First there are different stages of socialism which were not covered in our reading. Democratic Socialism, Revolutionary Socialism, Libertarian Socialism, Market Socialism, Green Socialism, Utopian Socialism, and Fabian Socialism. But I digress, socialism is the economic system where some basic businesses are owned by the government and the profits are evenly distributed among the country. This varies on the type of socialism.

8.2. Some socialist countries are: Armenia, Finland, Norway, Sweden, People's Republic of Bangladesh, and United Republic of Tanzania.

8.3. Pros

8.3.1. The greatest positive is social equality. The system eliminates poverty and no one is discriminated against.

8.3.2. The government takes taxes from wealthy and redistributes for less fortunate in the means of free education through college, free health care, and free childcare.

8.3.3. Workers get longer vacations, fewer hours a week, more employee benefits, more maternity leave, and benefits.

8.3.4. Some markets are controlled by the government and some are free.

8.3.5. Cooperative system where everyone's basic needs are met for the good of the whole.

8.4. Cons

8.4.1. Work ethic can be lower because it takes away the incentives to work hard.

8.4.2. Brain Drain can occur.

8.4.3. Tax rates are extremely high.

9. Resources

9.1. Nickels, W. G., McHugh, J. M., & McHugh, S. M. (2013). Understanding business. Boston: McGraw-Hill Learning Solutions.

9.2. World Population. (2018-06-12). Retrieved 2019-01-21, from