In a given society where individual lives are based on country economy problem, these question usually arise. Such as, the problem of inflation, consumer wants etc. In a given economy there are important questions that must be answered, whenever people argue on economy questions what come to people’s minds is how to deal with inflation, reduced unemployment and lastly is how to keep developing the economy. But these are not the three basic economic questions.

The real ones are….

What to produce?

How to produce?

For whom to produce?

Home

Economic Systems

The economy system of a country is based on how the country handled these three questions. The economic system of a country is the decision making of that country that can answer these questions.

Presently in the world there are four main types of economic systems, the market economy, the command economy, the traditional economy, and the mixed economy. And there are unlimited amounts of variations of these systems.

Traditional economy, this is an economy that gives answers to the three questions based on social customs and the way the society had dealt with these questions in the past history. Country’s customs may differ to that of a neighboring country so traditional economies vary from one another.

Second one is the market economy, this type of economy being used in United States and these questions are answered in the marketplace by the interaction of buyers and sellers. For example, the question of what to produce, this may be based on what is vogue at the moment in a society. The company or a producer produced a product that they think the public will buy well in order to make profit. Normally the question of how to produce is based on the producer’s choice. The producers decide to use more workers in production or decide to produce by using machines and computers to save labor costs. The question of, for whom to produce is determined on the buyer who decides what they want or need and the price they are willing to pay for it.

Market economy is good in motivating workers to work harder because they get paid based on what they do. An employee can increase their income or profit by working harder and this is a kind of motivation for and it makes them do a quality work.