Are there different types of economics?

1. Are there different types of economics? YES!!!

2. Types of economics

3. Market Economy • National and state governments play a minor role. • Consumers and their buying decisions drive the economy. • The assumptions of the market play a major role in deciding the right path for a country’s economic development. • Aims to reduce or eliminate entirely subsidies for a particular industry, the pre-determination of prices for different commodities, and the amount of regulation controlling different industrial sectors. One of the major features of economic system is the absence of central planning. Market decisions are mainly dominated by supply and demand. The role of the government is simply make sure that the market is stable enough to carry out its economic activities properly.

4. If the national and government play a minor role, it means, we, people play the major role in market economy. We are the individuals who exchange in the market. There is the circular flow of market economy, the households to firms and vice versa. The households are the people, who own the production, while the firms are the businesses who are in charge of production and selling.

5. Planned Economy • Also called Command Economy. • All major decisions related to the production, distribution, commodity and service prices, are all made by the government. • Aims at using all available resources for developing production instead of allotting the resources for advertising or marketing. The planned economy is directed to the government, and the market forces have very little say. This type of economy lacks the kind of flexibility that is present in a market economy, and because of this, the planned economy reacts slower to changes in consumer needs and irregular patterns of supply and demand.

6. This is absolutely opposite of market economy. If in market economy, we play the major role; in planned economy, the government play the major role. It also has no consumer. The government decides on everything. As it was said it is also called command economy.

7. Mixed Economy • Combines elements of both the planned and the market economies in one cohesive system. • Both government and business sectors play an important role in the economic decision-making of the country. • Include both capitalist and socialist economic policies and often arise in societies that seek to balance a wide range of political and economic views. • There is a flexibility in some areas and government control in others. • Prevails in many countries where neither the government nor the business entities control the economic activities of that country.

8. Both planned and market economy played a major role. They combine and both decide. Some are in control of the government and some are in control of the businesses. There is no lacking of both sector. There is also the circular flow of mixed economy. It is still the firms and the household, but it also passes through the government and some taxes and government owned factors and government purchases also play a role.

9. Reference http://www.economywatch.com/world_economy/world-economic-indicators/type-of-economic-system.html Steven Sheffrin, Arthur Sullivan, and Grant Wiggins, ECONOMICS (United States of America: Pearson Education, Inc., 2010).