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SUBMITTED TO..Miss. Paramvir KaurSUBMITTED BY..Hardeep GrewalRoll No. 1206463BBA 5th Semester
An economic system or economy is a system designed by a nation to utilise her resources for the purpose of satisfying the needs and wants of people.An economic system comprises all the institutions, organisations and policy mechanism by which the people of a country manage and utilise the countrys resources to obtain the things they need. It is the network of economic relationship in the society arising from the organisation and mode of production, distribution, consumption and exchange.
DEFINITION OF ECONOMIC SYSTEM.. An economic system consists of those institutions which a given nation or group of nations has chosen or accepted as the means through which their resources are utilised for the satisfaction of human wants.
TYPES OF ECONOMIC SYSTEM
A capitalist economy otherwise called as the free market economy activity where the means of the production are privately owned. Capitalism is a system of economic organisation featured by the private ownership and the use for private profit of man-made and nature made capital.
PRIVATE PROPERTYLARGE SCALE PRODUCTIONPROFIT INSTITUTIONSCOMPETITIONPRICE MECHANISMWAGE INSTITUTIONMONEY AND CREDITBUSINESS ORGANISATIONMARKET ECONOMY
MERITS OF CAPITALISM1.INCREASE IN PRODUCTION2. QUALITY PRODUCTS AT LOW PRICES3. PROGRESS AND PROSPERITY4. MAXIMISES WELFARE5.OPTIMUM USE OF RESOURCES6. FLEXIBLE SYSTEM
Leads to monopolyInequalitiesConsumers sovereignty a mythDepression and unemploymentInefficient productionNon- utilisation of resourcesClass conflictDEMERITS OF CAPITALISM.
Socialism is an economic system where the means of production are either owned or controlled by the state and the resource allocation , investment pattern, consumption,income distribution etc.are directed and regulated by the state. Socialism as an alternative to capitalism is an economic system which is controlled and regualted by the government so as to ensure welfare and equality of opportunity to the people. In socialism the role of the state is central. It owns the means of production and directs economic activity.
SALIENT FEATURES OF SOCIALISM.Social ownership of means of production.Social welfare is the main aim.Central planning.Equality of income and opportunity.Classless society.
MERITS OF SOCIALISM..Greater economic efficiency.Greater welfare due to less inequality of income.Absence of monopolistic practices.Absence of business fluctuations.
DEMERITS OF SOCIALISMLoss of consumerssovereignty.
No freedom of occupation.
Misallocation of resources.
MIXED ECONOMY ..
Mixed economy shares features of capitalism and state capitalism. It is characterised by the co-existance of public and private sectors and the over all government regulation of the economy. In a mixed economy private enterprise is permitted to function and flourish subject to control and restrictions by the govt. The extent of govt. control over business and its interference in economic activity varies from country to country.But a mixed economy aims at blending together the best control socialist or communist economy with the best of free enterprise in a capitalist economy. India has adopted the mixed economy system. Mixed economy is that economy in which both public and private institutions exercise economic control.
SALIENT FEATURES OF MIXED ECONOMY.Co- existence of public and private sectors.Individual freedom.Economic welfare.Economic planning.Price mechanism.Free and controlled economic development.Government intervention.
Achievement of faster economic growth.Best allocation of resources.Balance between the private and public sector.Establishment of a welfare state.Heavy capital investment through planned effort.1.MERITS OF MIXED ECONOMY..
DEMERITS OF MIXED ECONOMYUndue emphasis on the growth of public sector.Inefficient of both the sectors.Inefficient control of the private sector.Economic fluctuations.Failure to solve demographic and unemployment problems and inflation.Extensive and corrupt bureaucracy.