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Which one of the two major economic systems best describes the economy in the United...

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josorio05 | eNotes Newbie

Posted September 5, 2013 at 1:38 AM via web

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Which one of the two major economic systems best describes the economy in the United States and toward which one of the four key economic systems is it moving?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted September 5, 2013 at 1:57 AM (Answer #1)

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I assume that you are referring to command and market economies as the two “major economic systems.”  If so, the US is clearly best described as a market economy.  I assume that the “four key economic systems” that you are asking about are market, command, traditional, and mixed.  If so, the US is moving towards a mixed economy (in truth, it is already there).

The two major economic systems are command economies and market economies.  In a command economy, the government determines how the three basic economic questions will be answered.  Often, the government goes as far as owning most of the means of production.  In a market economy, market forces of supply and demand determine the answers to the three basic economic questions.  Clearly, the US is more of a market economy since the government does not control most of the economic activity.

However, the US is really a mixed economy.  It is basically a market economy, but the government does play a large role in the economy.  For example, the government gives subsidies and tax breaks for certain kinds of industries.  The government also enacts numerous regulations about how economic activity can be carried out.  Therefore, the US is moving towards being (or actually already is) a mixed economy.

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