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Economic Systems - Refers to organized task and activities in the allocation of resources, good and services by a nation
Major Economic systems
- Contains a private market and a public (government) owned sector.
- Allocation of economic resources are done based on market prices and market returns
- economic resources are owned by the government
- It contains a mixture of the features of both the market and command economies
Command (Planned) Economy
- the government owns all the economic resources and all the factors of production
- there is no place for private initiative and no incentives at work, since the people don't own economic resources
- the allocation and channelization of scarce economic resources is decided by the government
- Political systems in such economies are communist systems e.g. Kenya
- Consumers reign supreme in a market economy
- All economic resources are owned by the people
- The determinants of equilibrium of market price are demand and supply
- Political counterpart is called Capitalism e.g. USA
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