4 Basic Economic Systems of Today

     An economic system is the method a society uses to produce goods and services. the type of economic system that exists in each nation independent upon its goals and values. Economic systems differ in who owns methods of production and the method used to direct and coordinate the economic activity.

Traditional

     Traditional economic systems are mostly present in remote, developing areas such as Afghanistan. They rely on customs and rituals when deciding what, how, for whom to produce and distribute goods. Traditional economies face many problems, such as gender discrimination and as a result, the economy slow and not efficient.

Market

     Market economic systems act in self-interest and are free markets. Decisions on production and consumption are based on voluntary exchange. The markets determine what, how, and for whom to develop goods and services. Traits of market economies include private ownership of capital and factors of development. The United States was a market economy during the Industrial Age, but it became a mixed economy as a result of low quality goods. Market economies are based of free markets and have minimal government involvement.

Command/ Socialist

     Command or socialist economic systems promote equitable distribution. The government makes all the decisions on production and consumption of goods and services. They also plan economic decisions and answer the three basic economic questions. In command economies, the government  is either authoritarian or democratic. North Korea and Cuba are examples of command economies. Even though the government makes all the decisions, everyone is employed and receives equal pay.

Mixed

     Mixed economic systems combine characteristics of traditional and market economies and include government involvement. Most modern-day economic systems, such as Japan’s and America’s, resemble mixed economic systems. Mixed economic systems are the most efficient systems, as they have free markets where individuals control their own businesses but receive help from the government when they have financial problems.

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