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Economic System Types - Coggle Diagram
Economic System Types
Command
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Description
An economy where some key functions of the economy is controlled by the government with these being the main ones: production, investment, prices, and incomes.
Example
North Korea is a command economy, this is because it is a communist country which means that the government controls almost all aspects of the economy.
Traditional
Advantages: Less environmental destruction and better understanding in which way resources would be allocated.
Disadvantages: Can be affected by natural disasters. People starve if hunting or farming is poor in a year.
Description: A economy that relies on customs, history and time honored beliefs that help shape what good and services the economy produces as well as the allocation of those goods and services
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Market
The Free market econimic system is characterised by large market made up of individual people that all determine the state of said market . These individuals determine, based on want and need, the state and direction of the market (eg prices, valuable products, etc)
ADVANTAGES
Tends to drastically decrease prices of expensive items or goods over time (eg, iphones)
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Disadvantages
Short lived, as people prefer leasure over labor and get drawn to the ideas ofcommand economies
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Examples: early United States, as it was a country founded on freedom and individual liberty. Some of the most famous private entrepreneurs, which were driven by the market, came from this country.
Mixed
Description: A economic system that has qualities from both command and free markets. This is where the economy is influenced by private enterprises and the government.
Disadvantages: Tends to be more government controlled rather then individual freedoms. Governmental regulation can also cost a company so much that it may put companies out of buisness.
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Example: Iceland is a example of a mixed economy. We know this because the government has control of about 57% of the economy which is almost a perfect split of government control and business control.