Types of Economic Systems

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So what is it that makes our economy function? A traditional economic system is the work that people do and the goods and services they provide. A market economy is an economy in which prices of things are freely set based on the laws of supply and demand. The command economy is an economic system that is controlled by a centralized federal government. As my research goes this are some types of economic systems. A traditional economic system is the work that people do and the goods and services they provide. Its economy is based on custom and tradition or command. Countries that use this type of economic system are often rural and farm-based. Also known as a subsistence economy, a traditional economy is defined by bartering and trading. A traditional economy may have no official currency whatsoever. A market economy is an economy in which prices of things are freely set based on the laws of supply and demand. Market economy is like what we have people, can produce any good they want and compete in the market to sell it and make a profit. There is little government intervention or central planning. This economy rarely engages in government interventions such as price fixing, license quotas and industry subsidizations. A capitalistic economy. The command economy is an economic system that is controlled by a centralized federal government. It determines what goods a nation produces, and how to allocate resources to the production of those goods. Command economies are unable to efficiently allocate goods because of the knowledge problem. Industry is mostly publicly owned. Also called a centrally planned economy. In order to fully understand a traditional economy, it is necessary to first define the three main economic systems. Market economies are so called because prices are determined by market prices. In command economies, prices and supplies are
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