Types of Economic Systems An economic system

Types of Economic Systems

An economic system is the combination of the various agencies, entities (or even sectors as described by some authors) that provide the economic structure that defines the social community.

Types of economic system Traditional economic system Command economic system Socialism Market economic system Mixed economic system

A traditional economic system Traditional economy is a catching-all term normally used to describe economic systems that pertain in societies with extensive subsistem agriculture. The term may also be used for any economy that falls outside of popular notions of market and command economies. The term tends as "primitive. "This type of economy ensures that every member of society has a purpose and as well, a participatory function in society. In other words, each person has a certain activity or job.

In a command economic system or planned economy, the government controls the economy. The state decides how to use and distribute resources. The government regulates prices and wages; it may even determine what sorts of work individuals do. Socialism is a type of command economic system.

In market economies, economic decisions are made by individuals. The unfettered interaction of individuals and companies in the marketplace determines how resources are allocated and goods are distributed. pure market economy the government is entirely absent from economic affairs.

A mixed economic system combines elements of the market and command economy. Many economic decisions are made in the market by individuals. But the government also plays a role in the allocation and distribution of resources.