What are the different types of economy? Economy is defined as the resources and wealth of a certain region or country. Each country has economic systems that handles and manipulates the production, distribution, and consumption of the goods and services of the certain country and place. There are actually four main types of economy: the traditional, command or planned, market, and mixed.
The first of the four types of economy is formed and molded by tradition. This is called traditional economic system. This is composed of the work people do, services that these people provide, goods that they offer, and how these people exchange and use the resources that are available in their location. These types of economy follow patterns that have been existent for the longest times. They are not dynamic, as the things involved in the traditional economic system components do not change that much. Most of the time, the standards of living in places with this type of economy can be static and don’t change as there isn’t much mobility in occupations and finances to people as well. This is what makes the behaviors of the economy predictable. Therefore, people know what to do when something happens and they know what to expect from one another.
The second of the four types of economy is dictated by the government. This is called command economic system, also known as planned economy. The government does the entire decision making in these types of economy. They indicate how resources should be exchanged and spent. They regulate the wages of the people as well as the price of the goods in them. Some places that have these types even have their government appoints where people would work.
The third of the four types of economy is where decision and choices are made by the people in them themselves. This is called market economies. When it comes to market economies, people determine how the goods in their location are sold. They determine as well how the resources are spent. When it comes to work and jobs, it is up to them as well. They even decide which resources to consume and which goods to manufacture. When you hear of pure market economies, these are types of economy where the government is completely absent from all the economic matters.
Lastly, we have the mixed economic system. As the name implies, these are the types of economy that mixed command economy and market economy. This, however, doesn’t mean that the decision making is balanced. Here in these types of economy the decisions are mostly made by the individuals but the government handles the allocation of resources as well as the distribution of them. A very good example of a country that regulates a mixed economic system is the United States. You see, the people of the country can do whatever they want, with limitations of course. And then the government decides on which goods to produce and resources to spend. This combines the best attributes of the two types of economy, which gives out balance to the place linking them.