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Four types of Economic Systems - Coggle Diagram
Four types of Economic Systems
Traditional Economies
Advantages: They are very communal, they are more environmentally friendly, no waste or inefficiencies
Description: This bad boi is shaped by traditions and old customs and cultures. This shapes goods and the way services are conducted.
Disadvantages: High levels of competition, can be destroyed by natural events, people starve if the economy is really bad, vulnerable to other economy types
Examples: Africa, Middle East, Asia, all have traditional economies that help them be more communal and using the resources that are most available to them. This is also probably due to them being third world countries.
Mixed Ecomomies
Advantages: Freedom of choice, ensures economic development, encourages private initiative, ensures job security
Description: A type of economy involving elements from both private and public enterprises
Disadvantages: More emphasis on profit as opposed to the welfare of citizens, gap between rich and poor, efficiency hardly occurs because of the involvement of the state, high level of corruption and mismanagement
Example: The United States is an example of a mixed economy because the national government only has a little involvement. This includes restrictions on pollution and paying for roads in order for products to be transported.
Market Economies
Advantages:
Consumers have more choices
Anyone can start a business
People with the most experience make the most money
More freedom for business owners
Disadvantages:
Monopolies
Businesses can release unsafe products
Little/No healthcare
Less taxes to pay for public goods
Description: A market economy is a form of economy where the government has little to no interaction with the economy. Private businesses have almost complete freedom in what they produce.
Examples:
New Zealand has little regulation on businesses. Many regularly public facilities like post offices and airports, are private. You don't need a license to build a house.
Command Economies
Description
An economy that is determined centrally by the government. This includes production, investment, prices, and incomes.
Advantages
The government can easily control what is going on and make drastic changes depending on their needs.
Disadvantages
There are no free businesses. The government determines everything, regardless of how well the business is doing.
North Korea is one of the more popular command economies, as they regulate every product being sold there.