Economic System

• What is an economic system?


  An economic system specifies how production and distribution of goods and services are managed in a society.
• What does an economic system state regarding resources?


  It states how ownership and management of economic resources are organized for human satisfaction.
• What are the three types of economic systems?

  • Capitalist Economic System
  • Socialist Economic System
  • Mixed Economic System
• How can economic problems be addressed?

  Economic problems can be solved using any of the three economic systems.
• What is a Capitalist Economic System also known as?


  It is also referred to as a laissez-faire economic system.
• Who owns and controls resources in a Capitalist Economic System?


  Resources are owned and controlled by private individuals.
• What rights do individuals have in a Capitalist Economic System?


  Individuals have the right to make decisions on production and control factors of production for profit.
• Name a few countries that operate a Capitalist Economic System.


  USA, France, and Japan.
• What are the advantages of a Capitalist Economic System?


  1. Free enterprises
  2. Encourages hard work
  3. Provides alternative choices
  4. Competition
  5. Fosters economic development
  6. Promotes standard of living
• What is a disadvantage of a Capitalist Economic System related to market control?


  It creates room for monopoly.
• How does a Capitalist Economic System lead to economic disparities?


  It creates a wide gap between the rich and the poor.
• What is a feature of a Capitalist Economic System regarding competition?


  There is always competition in the production of goods and services.
• What is the primary motive in a Capitalist Economic System?


  The primary motive is profit maximization.
• What are the features of a Capitalist Economic System?


  • Profit maximization
  • Private ownership and control
  • Existence of competition
  • Individual satisfaction
  • Free market operation
  • Accumulation of wealth
  • Existence of individual initiatives
  • Production and consumption regulated by price mechanism
  • Freedom of choice
• What is a Socialist Economic System also known as?


  It is also referred to as a centrally planned or controlled economy.
• Who owns the resources in a Socialist Economic System?


  The state government owns and controls the resources.
• Name a few countries that practice a Socialist Economic System.


  China, Poland, Ethiopia, Mozambique, and Angola.
• What are the features of a Socialist Economic System?

  • State ownership of means and factors of production
  • Joint decision-making
  • Non-profit motive
  • Absence of economic rivalry
  • Non-price competition
  • Equitable distribution of income
• What are the advantages of a Socialist Economic System?


  1. Equitable distribution of resources
  2. Absence of exploitation
  3. Centrally planned economy
  4. Employment opportunities
  5. Prevention of private monopoly
  6. Absence of economic rivalry
• What is a disadvantage of a Socialist Economic System regarding consumer choice?


  Consumers lack access to a variety of products.
• How does a Socialist Economic System affect individual initiative?


  It reduces individual initiative as people depend on the government.
• What is a disadvantage of a Socialist Economic System related to economic development?


  It slows down economic development.
• What is a disadvantage of a Socialist Economic System regarding creativity?


  It leads to an absence of creativity and innovation.
• What is a Mixed Economic System?


  • Combines features of both Capitalist and Socialist systems
  • Ownership is partly by private individuals and partly by the government
  • Basic economic decisions are made by both private individuals and the public
• What are the features of a Mixed Economic System?


  1. Combines good qualities of capitalism and socialism
  2. Ensures job security
  3. Encourages private initiatives
  4. Freedom of choice
  5. Equitable distribution of income
  6. Checks and balances
• What are the advantages of a Mixed Economic System?


  1. Encourages private initiatives
  2. Freedom of choice in production and consumption
  3. Equitable distribution of income
  4. Combines good qualities of capitalism and socialism
  5. Supports job security
  6. Prevents monopolistic activities
• What is a disadvantage of a Mixed Economic System regarding wealth distribution?


  Wealth is not evenly distributed, creating a gap between the rich and the poor.
• How does a Mixed Economic System affect efficiency?


  It lacks efficiency due to state involvement.
• What is a disadvantage of a Mixed Economic System related to profit motives?


  There is more emphasis on profit-making at the expense of citizens' welfare.
• How does a Mixed Economic System affect labor?


  Labor is often exploited in the system.
• What is a disadvantage of a Mixed Economic System regarding corruption?


  There is a high level of corruption and mismanagement.