Types of economies

11 flashcards · Economics · by Addaneye

1. What are the three types of economies?

   Free market Command Mixed

2. What is a free market economy?

   Where all resources are allocated by the price mechanism and there's no government intervention

3. What is a command economy?

   Where the government allocates all the resources

4. What is a mixed economy?

   Where some resources are allocated by the economy and some are allocated by the government

5. What type of economy did Adam Smith support?

   Free market

6. Why did Karl Marx hate free market economies?

   Because they led to capitalism

7. Why did Friedrich Hayek criticise command economies?

   Impossible for governments to collect information needed

8. Pros of free market economies

   Free market can be very efficient Lower prices due to increased competition Increased choice

9. Cons of free market economies

   Can lead to inequality Monopoly Market failure

10. Pros of a command economy

    Correct market failure Less inequality Stops monopoly abuse

11. Cons of a command economy

    Government failure Limited choice Less incentive to work as everyone gets paid the same