* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Download RachKcomparing economic systems project copy
Survey
Document related concepts
Business cycle wikipedia , lookup
Sharing economy wikipedia , lookup
Participatory economics wikipedia , lookup
Economic democracy wikipedia , lookup
Ragnar Nurkse's balanced growth theory wikipedia , lookup
Criticisms of socialism wikipedia , lookup
Economic planning wikipedia , lookup
Economics of fascism wikipedia , lookup
Social market economy wikipedia , lookup
Market socialism wikipedia , lookup
Transformation in economics wikipedia , lookup
Production for use wikipedia , lookup
Steady-state economy wikipedia , lookup
Economic calculation problem wikipedia , lookup
Circular economy wikipedia , lookup
Post–World War II economic expansion wikipedia , lookup
Transcript
COMPARING ECONOMIC SYSTEMS PROJECT By: Rachel Knight Command Characteristics 1. The government creates a central economic plan for all sections and regions of the country. It normally starts with the 5-year plan to set the overriding economic goals. Goals of the 5-year plan is to generate a strong economic growth, increase production efficiency and best utilize scarce resources. 2. Government distribute all resources according to the central plan. Goals is to use the nations capital, labor, and natural resources. 3. The centrally planned economy is also known as command economics and they operate in direst contrast to free market systems. 4. The government creates the laws that regulate economic activity. These include regulations, directives, and wager price control to the device used for the central plan. Advantages There great at mobilising economic resources quickly, effectively, and on a large scale. They are able to override individual self-interest to achieve a greater goal for the society. It’s also good at transforming societies to follow the planners vision. It can guarantee jobs and income. Disadvantages 1. Economic efficiency: Since the government fixes wages, workers lack the incentive to work faster to produce more. Its expensive to run and lacks the flexibility to adjust quickly to consumers demand and changing economic conditions. 2. Economic freedoms: They sacrifice individual freedoms in order to pursue societal goals. Sometimes the results from the command economy millions of people get killed. 3. Economic growth: It doesn’t reward people that had innovation. There is no profit incentive to encourage entrepreneurship. 4. Central planning have caused leaders in many countries to move away from command economics and toward mixed economics. Example Cuba is largely state-controlled centrally planned economy overseen by the Cuban government. Though there remains significant foreign investment and private enterprise in Cuba. Cuba is owned and run by the government and most of the labor force is employed by the state. The Cuban government sets most prices and rations goods to citizens. Cubans receive low housing and transportation costs, free education, and health care and food allowance. 25 Jan. 2014. Web. 29 Sept. 2014. Mixed Characteristic It means that part of the economy is left to the free market and part of it is run by the government. Most economies are mixed, with vary’s degrees of state intervention. Mixed economies start from the basis of allowing private enterprise to run most businesses away. Then the government intervenes in certain areas of the economy such as regulation and spending money on public services. Most mixed economies allow government to have a command role in areas that safeguard the people and the market itself. Advantages It can efficiently allocate goods and services where they are needed, by allowing prices to measure supply and demand. It rewards the most efficient producers with the highest profit, ensuring that customers are getting the best value for their dollar. It encourages innovation that meets customers needs more creatively, cheaply or efficiently. Disadvantages 1. If there is to much free market, it can reward the competitive members of society and leave others without any government support. 2. Mixed economies are criticized by free market economists for allowing too much government intervention. Libertarians argue that governments make very poor managers of the economy. 3. They are also criticized by Socialists for allowing too much market forces, leading to inequality and an inefficient distribution of resources. Examples Iceland has a mixed economy with high levels of free trade and government intervention. In 1990s Iceland commenced extensive free market reforms, which initially produced strong economic growth. As a result, Iceland was rated as having some of the world’s highest levels of economic freedom. In 2006 the economy faced problems of growing inflation and current account of shortage. Partly in response, and as a result of earlier improvement, the financial system expanded rapidly before collapsing entirely in a sweeping financial crisis. 25 Jan. 2014. Web. 29 Sept. 2014. Free Market Characteristics 1. Private Property: Most goods and services are privately owned. This allows the owners to make legally binding contracts to buy, sell, lease, or rent their property. That means free market has to do with household and firm because they both go with owning property and selling items. The household owns the factors of production and they privately own the property. Firm is the organization that uses resources to produce a product or service, which it then sells. 2. Motive of Self-Interest: The market is driven by everyone trying to sell their goods or services to the highest bidder, while at the same time paying the least for the goods and services they need. Both the buyer and seller consider their self-interest so they can have what they need to survive. 3. Competition: Consumers striving their self-interest, have the incentive for lower prices, So the producers will lower their own prices so the customers will rather go get the item from you than another place that is selling the same item for a higher price. There’s competition everywhere in the world because the producers want to get more customers than any other store. 4. Laissez-faire principle expresses a preference for an absence of non-market pressures on prices and wages, such as those from government taxes and regulation. Advantages 1. There’s economic efficiency because the free market economy responds efficiently to rapid change. Producers provide only the goods and services the consumers want and they put the price on the item of what consumers are willing to pay. 2. Economic freedom because the free market has the highest degree of economic freedom of any system. Workers work where they want, and what they want to produce. 3. Economic growth because free market encourages growth. Entrepreneurs are always looking for opportunities to come up with the next new thing. 4. Additional goals because they offer a wide range of goods and services than any other system because producers have incentives to meet consumers demand. Disadvantage There’s a disadvantage for competition because elderly, children, and mentally or physically challenged people are in a disadvantage. The producers have to decide whether it’s in a larger self-interest to set aside resources to make sure the elderly, children and mentally people get their needs met or whether to let them just fall and not come up with a safer product because the majority people in the world want that product. Example Singapore’s economic freedom score is 89.4. Even though no country can be completed free Singapore is the 2nd freest in the 2014 index. Over 20 years Singapore’s economic freedom has advanced by nearly 3 points. The areas of market openness and limited government have advanced by double digits. High levels of trade freedom and regulatory efficiency continue to underpin Singapore’s competitiveness in global business and ensure a strong economic growth. 25 Jan. 2014. Web. 29 Sept. 2014. Comparison Between all 3 Economy Systems In the command economy the main decision maker is the government. No person may independently decide to open and run any kind of business. The government decides what goods and services to be produced. So this economy is communism because the government makes the decisions. An example of command is when Walmart put K-Mart out of business because now you don’t see any K-Marts and you see Walmart all over the place. It’s different from free market by free market is where the nations economics decisions are the result of individual decisions. The prices that you charge for your goods or services will be influenced by the prices charged by your competitors. An example of free market is Walmart and Hannaford because Walmart lowers their prices on things so they can get all of the customers. So this economy is socialism and it’s different from command economy because in command economy the government makes the decisions while in free market the decisions are made by the consumers and businesses. In mixed economy private ownership makes the production. Decisions by consumers and businesses determine the economic activity and that is called Capitalism. An example of mixed economy is Ricker’s Farm they are privately owned and they can choose the price of their supplies. The mixed economy is different from the other two systems by command economy the decisions are made by the government. Free market the decisions are made by the public and private ownership while mixed economy makes decisions by only private ownership. References Amadeo, Kimberly. "Market Economy." About News. US Economy Expert, 7 Apr. 2014. Web. 29 Sept. 2014. Amadeo, Kimberly. "Command Economy." About News. US Economy Expert, 7 Apr. 2014. Web. 29 Sept. 2014. Amadeo, Kimberly. "What Is a Mixed Economy?" About News. US Economy Expert, 7 Apr. 2014. Web. 29 Sept. 2014. The Social Studies Help Center. 10 May 2001. Web. 29 Sept. 2014. "Wikipedia." Economy of Cuba. 14 Aug. 2008. Web. 29 Sept. 2014. "Wikipedia." Economy of Iceland. 17 Aug. 2014. Web. 29 Sept. 2014. "Singapore." 2014 Index of Economic Freedom. 25 Jan. 2014. Web. 29 Sept. 2014.