1 Answer | Add Yours
There are three general types of economic systems. These are command economies, traditional economies, and market economies. Of course, most economies have aspects of more than one of these ideal types. Each of these economic systems answers the basic economic questions (what to make, how to make it, who to make it for) in a different way.
In a traditional economy, the economic questions are answered by tradition. That is, things are done the way that they have always been done. People make the things they have always made in the ways they have always made them. This can be very good in a way because it promotes stability and certainty. You typically know what your life will be like and you don’t have to stress about making many decisions. On the other hand, such an economy will be very stagnant because it never does anything new.
In a command economy, the government makes all the decisions. It decides what will be made and how. It decides who gets the things that are made. This sort of an economy can be good because it can ensure that there will be little inequality in the country. However, it also tends to be very bad at giving consumers what they want because it is the government that is making all the decisions.
We’ve answered 301,245 questions. We can answer yours, too.Ask a question