Types of Economies

Types of Economies

• Planned
  • The Central Authorities decide what to produce.
• Market
  • Market prices guide production decisions.
• Mixed
  • Certain segments of the economy are dominated by the Government.

Why are most nations

Mixed Economies

these days?

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Imagine an economy in which the Government tells you:

where you will workthe type of house you will live inthe type of person you will marrythe number of children in your familywhere you will go to schoolwhere you can travelwhat you can read

Contrast that with a market economy where the Government provides the basic infrastructure, a legal system, and market information but lets individuals and firms decide what, how, and for who to produce.

The U.S. is a Mixed Economy.