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Economic Systems

An economic system is the organization of production, distribution, and consumption for goods and services. An economic system includes the different economic structures and components that make up a society. The different types of economic systems transfer information between each other and are related to one another. Economic systems share the concept of mode of production and are most often centered on capitalist mixed economies.

Economic systems all share the problem of having to supply the unlimited wants of consumers with limited resources. Economic systems have to address the primary economic decisions of what to produce, how to produce it, and who to produce it for. The general function of an economic system is to stabilize the economy, guide economic progress, distribute goods, services, and resources, as well as manage production. The function of the government, ownership of profits and resources, and price determination are some of the components of economic systems.

Economic systems differ in the way they allocate means of production and in their use of inputs. An important distinction between capitalist economic systems and socialist economic system is the objective of each system. In a socialist economic system, the objective of production is to produce goods and services in order to satisfy demand. In capitalist economic systems, the objective of production is profit maximization.

The types of general economic systems include the barter economy, capitalism (free economy), gift economy, global economy, mixed economy, participatory economy, socialism (planned economy), and traditional economy. Each differ in their characteristics and how they address the primary economic decisions.

 

References:

1. The Role of Behavioral Economics and Behavioral Decision Making In Americans' Retirement Savings Decisions. Retrieved from www.ssa.gov/policy/docs/ssb/v70n4/v70n4p1.html

Categories within Economic Systems

Barter Economy

Postings: 8

A barter economy is an economy that exchanges goods or services for other goods or services, without the use of currency.

Capitalism (Free Economy)

Postings: 37

A free market is an economic system where the means of production is privately owned and a capitalist economic system is a system that allows individuals to accumulate their own wealth.

Gift Economy

Postings: 0

A gift economy is an economy where exchanges occur through the form of gift giving, without contracts or agreements for immediate rewards.

The Global Economy

Postings: 28

The global economy is the economy that eists between countries across the world and is usually represented by a single currency

Mixed Economy

Postings: 1

A mixed economy is an economic system that functions with both state and private sectors, making it possess qualities of planned and market economies.

Participatory Economy

Postings: 0

Participatory economics (or parecon) is an economic system that incorporates the public when making economic and political decisions.

Socialism (Planned Economy)

Postings: 3

A socialist or planned economy is when a government regulates and controls all areas of production and investment within an economy.

Traditional Economies

Postings: 1

A traditional economic system is a system that functions through traditional agricultural practices such as hunting and fishing and follows customary policies.

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