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Types of Economic System - Coggle Diagram
Types of Economic System
Socialism
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Definition
An economic system where all the economic decisions are made by the government or a central authority
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Merits
-Production according to basic need
-Equal distribution of income and wealth
-Better allocation of resources
-No serious unemployment or inflation
-Rapid economic development
-Social welfare
Demerits
-Lack of incentives and initiative by individuals
-Loss of economic freedom and consumer sovereignty
-Absence of competition
-Waste of economic resources
Mixed Economy
Definition
As economic system blending elements of a market economy with elements of a planned economy, free markets with state interventionism, or private enterprise with public enterprise
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Merits
-Help in increasing national production in the country.
-Both public and private sectors work hard to bring about more production
-the problems created by free enterprise and too much public control and solved through mixed economy
Demerits
-Mixed economy is half way house
-It is not helpful in access optimal use of national resources.
-Mixed economy suffers from the disadvantages of both the capitalism and the socialism
Islamic Economy
Definition
An economic system which combined both capitalism and socialism and follows the principles of syariah
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Merits
-Reducing economic disparity
-Inviting more people into the markets
-Promoting simplicity and transparency
-Connecting financial markets and economic activity
-Linking savings and investment
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Capitalism
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Merits
-Production according to consumers need
-Economic freedom
-Variety of consumer goods
-Enhanced trade, business and R&D
-Automatic incentives
-Flexibility
Demerits
-Inequality of distribution if wealth and income
-Inflation and high unemployment rate
-Lack of social welfare
-Wasteful competition
-Misallocation of resources
-Social cost
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