Government and Economic Systems Matching
| A | B |
|---|---|
| Command Economy/Communism | Economic system in which the government makes all economic decisions. |
| Market Economy/Capitalism | Economic system in which the means of production and distribution are privately owned and operated. |
What economic system does not exist in the world?
Market Economic System There is no government intervention in a pure market economy (“laissez-faire“). However, no truly free market economy exists in the world.
How are decisions made in an economic system?
This economic system is directed by a single centralized power such as government, which controls all activities of this type of economic system. The government has the power to take all decisions regarding the economy. It is responsible to make decisions about the type of crops produced and quantities of the crops.
What kind of economic system does the government have?
This is a type of economic system where the government has no control over the market, the citizens and businesses decide which goods will be produced in what quantity. The pricing is decided by the laws of demand and supply. The government can decide the pricing ceiling so that they do not charge the customer as per their free will.
How does government work in a market economy?
In the market economic system, the government does not control the major segment of the economy such as vital resources and valuable goods and services. In the market economy, industries and households act in self-interest and determine how resources will be allocated, what kind of goods will be produced or bought.
What are the four types of economic systems?
There are basically four main types of economic systems – Traditional Economy, Command Economy, Market Economy, and Mixed Economy. In this article, we learn about each of the types of economic system in detail.
