Essay On Economic System

THE ECONOMIC SYSTEMS

A system is a set routines designed to achieve certain goals or duties. An economy is a system used by a state or country to careful manages their resources and monitors the supply of money, trading and production methods of goods and services. They are 4 main economic systems which are the Traditional system, Command economy, Market economy and Mixed economy.

Traditional system

The oldest economic system is called Traditional system. It is slow to adapt to changing conditions and stubbornly refrains from innovation. The goods and services in this economy are produced and distributed in the same way by each consecutive generation. This system does not put its economic activities as first priority often resulting in little growth. Economic activities are usually secondary to religious, cultural values and the aspiration to continue their present state. Nowadays, an authentic traditional system is very scarce and can often be found in rural regions with high levels of subsistence farming where communities rely on the food they produce. Countries that evolve their economies past the traditional level often develop into market or command economies. http://www.investorwords.com/6709/traditional_economy.html#ixzz30rcFjUrO

Advantages

The success of an economy is determined by its financial stability. In traditional economy, resources are distributed by inheritance. The main advantage of this system is that the people are close-knit and they support each other. This reduces competition for resources and provides individuals with sense of security because their roles are well-defined. This gives them a psychological stability that other economic forms often lack. Each individual in the economy is employed in some for...

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...ainst price fixing and unreasonable pricing of basic goods.. http://www.ehow.com/info_8252598_advantages-disadvantages-mixed-economic-system.html#ixzz310dQ5fdu Disadvantages

Allowing government intervention in the form of state monopolies harms competition, which can have serious effects in the economy's performance.

Even though mixed system is not the same as command economy, when the state controls key sectors, bureaucratic decisions can affect the economy's efficiency. The free market is always changing and is unpredictable. Bureaucratic decisions have their own limits. If the state relies too much on rules and procedures, the economy will become unmanageable and too rigid; responding slow to changing economy can lead to serious economic crisis in the long run.

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