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💡 It is a framework with combination of forces to reach the planned targets or objectives
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Types of economic system
Free economy:
A free economy, also known as a market economy, is an economic system in which market forces of supply and demand determine the prices of goods and services, as well as production and distribution.
There is minimal government intervention and individuals have the freedom to produce, exchange, and consume goods and services as they see fit.
Dictation by government is absent. Individuals dictate themselves
Advantages
People will be creative
Competition between individuals and organization is productive
As there is no dictation individuals learn to impose self discipline, which turns out to be a productive outcome
Pitfalls
Chances of loses are huge
Recovery is slow
Free economy does take a long time finding balance (equilibrium) between market forces of supply and demand
Centralized communication is absent
Free economy must be substituted by the idea of capitalism
Controlled Economy
Maximum ownership and intervention of the government
Sharing resources but individuals do not own the recourses / assets
A controlled economy, also known as a planned economy, is an economic system in which the government plays a dominant role in the allocation of resources and production of goods and services.
The government controls key industries and makes decisions on investment, production, and pricing, with the goal of achieving specific social and economic goals, such as full employment and economic stability.
credit: goutam kumar
Advantages
Resources can be equally divided
System is regulated and controlled by authority
Everyone (deserving or not) gets the benefit of the shared resources, such as China (1976 - Present)
