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SYSTEM ECONOMY
DEFINITIONS:
• SET OF CUSTOMS LAW, THE LAW RULES RELATING TO THE PRODUCTION, EXCHANGE AND CONSUMPTION OF GOODS AND SERVICES.
• AN ECONOMIC SYSTEM CONSISTS OF A SET OF CONTROLS TO DETERMINE HOW MANY RESOURCES USED TO SATISFY THE REQUIREMENTS OF
THERE ARE 5 BASIC FEATURES OF THE ECONOMIC SYSTEM:
• PROPERTY OWNERSHIP
• STARTUP COMPANY
• ECONOMIC INCENTIVES
• PRICING MECHANISM
• MARKET COMPETITION
TYPE OF ECONOMY SYSTEM
CAPITALISM SOCIALISM COMUNISM MIXED ECONOMY
ISLAMIC ECONOMY
CAPITALISM• Derived from the word capital (English: capital), which means "capital"• This system was introduced by Karl Marx• economic and social system that tends toward the accumulation of wealth
by individuals without government interference and seeks profit
• Capitalist economic system driven by market forces in determining the production, cost, pricing of goods and services, investment and income
• capitalist thought this system creates an obvious disparity between the rich and the poor. System contrary to this ideology was communism and socialism.
• In this system individu will own the source and wealth without any distrubted.
ADVANTAGE
There solutions economic
power
there is economic freedom
maximum efficiency
there are power users
DISADVANTAGE
misuse of resources effect
externalities
lack of public product monopoly power exists
lack of laborers
SOCIALISM• This system is also known as the central planning system• An economic system whose goal is to serve the society, is
general, not specific individuals.• Factor of production or economic resources controlled by the
state, individuals are not given the freedom to have it.• government is directly involved in regulating economic
activity.
Large scale production
Fairness opinion
distribution
Expenditure without rival
economic stability
ADVANTAGE:
MISTAKES IN DECISION MAKING
LESS INITIATIVE AND MOTIVATION
NO DEVELOPING TECHNOLOGY AND
INNOVATION
DISADVANTAGE:
COMUNISM (SOVIET UNION)• Introduced by Karl Marx as the final stage in human society.
• Type promote socio-economic growth of a classless society based on common ownership and control of the factors of production and property in general.
• The system aims to integrate the management of all economic resources.
•Main idea was simple: Free the lower class from poverty and give the poor fighting chance.
• IN ORDER TO LIBERATE LOWER CLASS,THE GOVERNMENT WOULD HAVE TO CONTROL ALL MEAN OF PRODUCTION.
• COMMUNISME IS A SYSTEM OG GOVERNMENT AND IDEALS WHERE ALL PEOPLE ARE CONSIDERED EQUAL IN AN ATTEMPT TO CREATE A FAIRER SOCIETY.
• INHERITANCE AND OWNING A BUSINESS FOR PRIVATE GAIN FOR EXAMPLE IS FORBIDDEN
ADVANTAGE
Fairness distribution,all people get
Economic problems rarely occur
Any expenditure activities run smoothly
Can provide the perfect designation and sufficient labor
DISADVANTANGE
The freedom of each individual to progress stalled.
There is no competition between the public
People do not have any ownership of the resource
Encourage people to avoid work.
Collective ownership would not be efficient.
DIFFERENCE &
SIMILARITY
DIFFERENCE CAPITALISME SOSIALISM KOMUNUSIMSOURCE OWNERSHIP
INDIVIDUAL GOVERNMENT GOVERNMENT
COMPETITION MARKETING
HAS COMPETITION
NOT HAS COMPETITION
NOT HAS COMPETITION
PRICE MECHANISMS
FIRMS CONTROL
GOVERNMENT GOVERMENT
ECONOMIC PROGRESS
FAST PROGRESS
SLOW PROGRESS
SLOW PROGRESS
TECNOLOGY DEVELOPMENT
FAST DEVELOPMENT
SLOW DEVELOPMENT
SLOW DEVELOPMENT