Economic Systems

Economic Systems: Pros and cons,

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Economic Systems by Mind Map: Economic Systems

1. Command Economy

1.1. In a Command economy production, investment, prices, and incomes are determined centrally by the government and not by the people

1.1.1. Pros: Resources and be supplied at a rapid rate without the need for approval Everyone is paid the same and has the same benefits Education and Healthcare is provided by the government Focus is on society as a whole and not the individual

1.1.2. Cons: People are given little freedoms There is no competition, only the government The government controls the supply and demand no matter what the people want or need

1.2. An example of a Command economy would be North Korea. The government or the Dictator controls the market and prices down to the food people buy. There is little to no involvement with other countries.

2. Market Economy

2.1. In a market economy production and prices are determined by unregulated competition between privately owned businesses without government involvement

2.1.1. Pros: Supply and demand is determined by the people Less government involvement Private businesses encouraged to grow

2.1.2. Cons: Not everyone will become wealthy or successful Market economies rely on competition Privately owned companies control resources

2.2. An example of a market economy is Hong Kong. The government is small, which meant little to no restrictions on capitalism. Hong Kong is known as one of the freest markets today because of the supply and demand is high and innovation.

3. Mixed Economy

3.1. In a Mixed economy, both public and private enterprises are combined; meaning there is government involvement in certain field of resources, such as healthcare, education, and public assistance programs.

3.1.1. Pros: The government assistance helps those to get on their feet Same freedoms as Market economy Small businesses have the freedom for innovating new products

3.1.2. Cons: Government assistance only helps so much, so those who are trying to move forward are stuck at their poverty level, this also can create less competition in small business Taxes will be higher to provide for the government aid

3.2. The United States is well know for being a Capitalistic state but with the rise of taxes and government involvement, the United States had become a better example of a Mixed economy; Because there are government programs such as financial aid for higher education, and food stamps (SNAP and WIC) that are offered to those who qualify to a certain poverty line.

4. Traditional Economy

4.1. A Traditional economy does not operate under a profit motive, but instead concentrates on resources such as food.

4.1.1. Pros: Smaller communities Produce only what they need or what they will use More of an sustainable market Everyone has a role to contribute

4.1.2. Cons: No competition Weather patterns can cause problems when relying on natural resources; they can run out No profit nations - survival comes first, trade is also high

4.2. An example of a Traditional economy would be a tribe like setting in a third world or under developed country; That uses natural resources and cultivation to sustain a living.

5. It is important to have a an economic system because this is how the country or counties operate as a system; without it there would be little growth as a whole nation. Even those that use a Traditional economy use a system because they have to work together in order to survive.