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Economic System Essay
622 Words2 Pages
Recommended: Role of government in the economy
Introduction
Economic systems
An economic system is a pattern of organisation which is aimed at solving the three central questions. They are four mechanisms that may be used to solve the economic problems.
There are four systems in which countries may operate;
The Command system
The Traditional system
The market system
The mixed economy system
Market system
According to P Mohr (2008:30) Market system is an economic system is characterised by individualism, private freedom, private property, property rights, decentralised decision making and limited government intervention. A market system is driven by self- interest.
The only major role performed by government would be that of creating a framework of rules, within which both private individuals and firms could conduct their affairs, the motive is profit in this system, individuals will benefit from this in the long run.
(Adam smith 1766) states that the market mechanism works like an invisible hand which coordinates the selfish actions of individuals to ensure that everyone is better off .Smith emphas...
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