Economy - its Meaning Types — Flashcards

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An economy is a system by which people get living. It is also a framework where all economic activities are carried out. Its main purpose is to satisfy human wants using limited resources.

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Human wants are unlimited, but resources are limited. An economy organises production, consumption, saving, and investment so that scarce resources are used in a proper way to satisfy wants as much as…

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It means economic institutions and systems are created by people. They can be changed, replaced, or destroyed according to society's needs. Economic systems are not natural; they are organised by huma…

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Gainful economic activity must be legal and fair. Illegal or unfair means like robbery and smuggling may bring income, but they are not considered proper economic activity because they do not form a s…

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The same people often act as both producers and consumers. As producers, they work and produce goods and services. As consumers, they buy and use those goods and services. This is called a dual role.

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The three main types are: capitalist economy, socialist economy, and mixed economy. These are classified according to who owns the means of production and who controls economic decisions.

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A capitalist economy, also called a free enterprise economy, is based on private property, freedom of enterprise, consumer sovereignty, profit motive, competition, and price mechanism. Government inte…

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Capitalism is called the oldest form of economy because it developed earlier than the other modern economic systems. Earlier economists also supported laissez faire, which means leave free, and prefer…