Economic Systems

 An economy is a system of production, distribution, and

consumption of economic goods. Economic goods are any
material items or services that satisfy people's needs and
wants
 An economic system is the structure of production,
allocation of economic inputs, distribution of economic
outputs, and consumption of  goods and services in an
Flow Chart Of Economic System
* Manufacturing. Transformation of materials into intermediate and
finished goods. 
 * Regulation. The way the production system is controlled and
regulated.Mostly the role of governments. 
 * Circulation. Activities that link the elements of the production
system. Includes transport and communications. 
  * Distribution. Activities making goods and services available to the
consumer, such as retailing. 
 DIMENSIONS OF ECONOMIC SYSTEM

Decision-Making Structure: How decisions are made

regarding the use of economic inputs , distribution of
output, the level of centralization in decision-
making, and who makes these decisions.
Coordination Mechanism: How information is
obtained and used to coordinate economic
 activity.The two dominant forms of coordination
include planning and the market.
Productive Property Rights: This refers to ownership
and control over the use of the means of production.
They may be owned privately, by the public, by
those who use the property, or held in common by
all of society.
Incentive System: A mechanism for inducing certian
economic agents to engage in productive activity; it
can be based on either material reward
(compensation) or moral reward (social prestige).

Basic types of Economic

Systems
 Socialist Economy
 Mixed economy
 Capitalist Economy
Also called
Capitalism
Free Enterprise
Private Enterprise
A capitalist economy is an economic system in
which production and distribution of
commodities takes place through the
mechanism of free markets.

An individual has right to buy and sell any

number of goods and services and to choose
any occupation. So, it is also called as FREE
MARKET ECONOMY.

Example- U.K., Germany.

AKA
Command Economies
Marxist Economies
Communist Economies
A planned economy is also sometimes called a
command economy.
The most important aspect of this type of
economy is that all major decisions related to the
production, distribution, commodity and service
prices, are all made by the government.

The tool of production are organized, managed

and owned by government, with the benefit
accruing to public.

Objective is for government to own and run

business for the good of society
A mixed economy combines elements of both the planned
and the market economies in one cohesive system. This
means that certain features from both market and
planned economic systems are taken to form this type of
economy.

In a mixed economy there is flexibility in some areas and

government control in others. Mixed economies include
both capitalist and socialist economic policies and often
arise in societies that seek to balance a wide range of
political and economic views.
 
Traditional economy (a generic term for
older economic systems)
Participatory economics (a system where
the production and distribution of goods is
guided by public participation)
Gift economy (where an exchange is made
without any explicit agreement for
immediate or future rewards)
Barter economy(where goods and services
are directly exchanged for other goods or
services)