Types of Economies

Answer

An economy is the way a nation makes choices about how to use its resources to produce and distribute goods and services. It shows how production and distribution are organised in a country.

Answer

An economy can be classified on the basis of ownership of means of production and on the basis of the level of economic development.

Answer

Capitalism is a form of economic organisation in which means of production are owned by private people and operated for profit. It is also called a free economy or laissez-faire economy. Businesses ar…

Answer

Adam Smith considered the price mechanism as an invisible hand. It means market forces help solve production and consumption problems automatically under capitalism.

Answer

The main features are private property, freedom of enterprise and contract, freedom of consumption, market mechanism, profit motive, and high competition. Government interference is very limited.

Answer

Right to property under capitalism is not absolute. People cannot use productive resources for undesirable goods. The right exists, but it can be restricted for public interest or national security.

Answer

A capitalist economy can produce a variety of goods, use resources efficiently, encourage hard work, support technological progress, and raise production and living standards.

Answer

A capitalist economy often creates income inequality, class conflict, unemployment, economic fluctuations, and exploitation of workers. Social welfare may be ignored in the race for profit.