Economic Systems(Business Studies)

What is an economic system?

A system that organizes the production, distribution, and allocation of goods, services, and resources.

What does an economic system regulate?

Land, labour, and capital.

What are the 3 key economic questions?

What to produce, how to produce, and for whom to produce.

What are the 3 types of economic systems?

Planned economy, market economy, mixed economy.

What is a planned economy?

The government makes all decisions about production and resources.

Another name for a planned economy

Socialism or communism.

Who owns resources in a planned economy?

The government.

Advantage of a planned economy (1)

Reduces inequality.

Advantage of a planned economy (2)

Low unemployment.

Advantage of a planned economy (3)

Government controls prices.

Disadvantage of a planned economy (1)

Little innovation.

Disadvantage of a planned economy (2)

Poor quality goods.

Disadvantage of a planned economy (3)

Limited consumer choice.

What is a market economy?

Private individuals own resources and make decisions.

Another name for a market economy

Capitalism.

Main aim of businesses

To make profit.

Who decides what to produce in a market economy?

Businesses and entrepreneurs.

Advantage of a market economy (1)

Wide variety of goods.

Advantage of a market economy (2)

Encourages innovation.

Advantage of a market economy (3)

Responds quickly to needs.

Disadvantage of a market economy (1)

Income inequality.

Disadvantage of a market economy (2)

Worker exploitation.

Disadvantage of a market economy (3)

Lack of public services.

What is a mixed economy?

A combination of government and private control.

Why was the mixed economy created?

To combine strengths of planned and market systems.

Example of a mixed economy

South Africa.

Who owns resources in a mixed economy?

Both government and private sector.

What does government provide in a mixed economy?

Education, housing, healthcare.

Disadvantage of a mixed economy (1)

Possible corruption.

Disadvantage of a mixed economy (2)

Income inequality.

What is the global economy?

Interconnection of countries' economies.

What is globalisation?

Integration of production and consumption worldwide.

Advantage of globalisation (1)

Creates jobs.

Advantage of globalisation (2)

More goods available.

Disadvantage of globalisation (1)

Job losses in wealthy countries.

Disadvantage of globalisation (2)

Poor working conditions.

Disadvantage of globalisation (3)

Loss of culture.