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Presentation On EconomicSystems

Presented By

Tausif Ahmed

Zeeshan AhmedSyed Ahmar Hejazi

Wamiq Khan

Talha Karim

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ECONOMIC SYSTEM

An economyis a system of production,

distribution, andconsumption of economic goods.

Economic goods are any material items orservices that satisfy people's needs and wants

An economic system is the structure of production,

allocation of economic inputs, distribution ofeconomic outputs,and consumption of goods and services in aneconomy.

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EconomicSystem Economic systems

mainly deal with the

relationships betweenproduction (supply) andconsumption (demand).

What is being produced

has to be consumed andwhat is being consumedhas to be produced.

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* Manufacturing. Transformation of

materials into intermediate and

finished goods.

* Regulation. The way theproduction system is controlled and

regulated. Mostly the role of

governments.

* Circulation. Activities that link

the elements of the production

system. Includes transport and

communications.

* Distribution. Activities making

goods and services available to theconsumer such as retailin .

Flow Chart Of Economic System

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DIMENSIONS OF ECONOMIC SYSTEM

Decision-Making Structure: How decisions are made

regarding the use of economic inputs , distribution of

output, the level of centralization in decision-making, and

who makes these decisions.

Coordination Mechanism: How information is obtained

and used to coordinate economic activity. The two dominantforms of coordination include planning and the market

.

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Productive Property Rights: This refers to ownership and

control over the use of the means of production. They may be

owned privately, by the public, by those who use the property,or held in common by all of society.

Incentive System: A mechanism for inducing certian

economic agents to engage in productive activity; it can bebased on either material reward (compensation) or moral

reward (social prestige).

Contd.

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Basic types of Economic systems

Capitalist Economy

Socialist Economy

Mixed economy

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Adam Smith THE WEALTH OFTHE WEALTH OF

NATIONS (1776)NATIONS (1776)

biblebible ofCapitalismofCapitalism

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Market Economies

Also called Capitalism

Free Enterprise Private Enterprise

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Market Economy

A capitalist economy is an economic system in which

production and distribution of commodities takes place

through the mechanism of free markets. An individual has right to buy and sell any number of goods

and services and to choose any occupation. So, it is also

called as FREE MARKET ECONOMY.

Example- U.K., Germany.

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Centrally Directed Economies

AKA Command Economies

Marxist Economies CommunistEconomies

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SOCIALIST ECONOMY

(PLANNED ECONOMY)

A planned economy is also sometimes called a command economy.

The most important aspect of this type of economy is that all majordecisions related to the production, distribution, commodity andservice prices, are all made by the government.

The tool of production are organized, managed and owned by

government, with the benefit accruing to public.

Objective is for government to own and run business for the good ofsociety

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MERITS OF SOCIALIST ECONOMY

Efficient use of resources

Rapid economic growth Improving productive efficiency

Social security and welfare

Social justice

Economic stability

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DEMERITS OF SOCIALIST

ECONOMY

Bureaucracy and Red Tapism

Not successful in business Insufficient resources

Misallocation of resources

Loss of consumers sovereignty

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Mixed Economy

A mixed economy combines elements of both the planned andthe market economies in one cohesive system. This means thatcertain features from both market and planned economic

systems are taken to form this type of economy.

In a mixed economy there is flexibility in some areas andgovernment control in others. Mixed economies include both

capitalist and socialist economic policies and often arise insocieties that seek to balance a wide range of political andeconomic views.

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ADVANTAGES OF MIXED ECONOMY

Social safety

Free enterprise People can make their own decisions

Limited control of government

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D

ISADVA

NTAG

ES OF MIXED

ECONOMY

Suffers from disadvantages of both capitalistand socialist economy.

Business people tend to find their ownmarkets.

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FEATURES OF MIXED ECONOMY

Co-existence of public and private sectors

R

ole of price system and governmentdirectives

Government regulation and control of privatesector

Consumers sovereignty protected Government protection of labor

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ELEMENTS OF MIXED ECONOMY

to possess means of production

to participate in managerial decisions

to buy and sell

to hire

libraries and other information services

roads and other transportation services

schools and other education services social security for the aged and infirm

government subsidies to business

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OTHERS TYPES OF ECONOMIC SYSTEM

Traditional economy(a generic term for oldereconomic systems)

Participatory economics (a system where theproduction and distribution of goods is guided bypublic participation)

Gift economy(where an exchange is made without any

explicit agreement for immediate or future rewards) Barter economy(where goods and services are directly

exchanged for other goods or services)

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