3.Economics (794199)
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Economic Systems
There are a number of ways in which a government can organize it's economy and a type of system chosen is critical in shaping environment in which businesses operate.
An economic system is a quite simple the way in which a country uses it's available resources (land, workers, natural resources, machinery etc.) to satisfy the demands of its inhabitants for goods and services. The more goods and services that can be produced from these limited resources, the higher the standard enjoyed by the country's citizens. I'll tell about
Planned economics
Planned economies are sometimes called "command economies" because the state commands the use of resources that are used to produce foods and services as its own factories, land and natural resources. Planned economies have a large amount of central planning and direction, when the government takes all the decisions, the government decides production and consumption. Planning of this kind is obviously very complicated to do and the result is that there is no society, which is completely a command economy. The actual systems employed varies from state to state, but planned economies have a number of common features.
Firstly, the state decides precisely what the nation is to produce. It is the intention of the planners that there should be enough goods and services for all.
Secondly, industry are asked to comply with these plans and each industry and factory is set a production target to meet. You could think of the factory and farm targets to be objectives which, if met, allow the nations overall aim to be reached.
A planned economy is simple to understand, but not simple to operate. It does, however, have a number of advantages:
* Everyone in society receives enough goods and services to enjoy a basic standard of living.
* Nations do not waste resources duplicating production.
* The state can use its control of the economy to divert resources to wherever it wants. As a result, it can ensure that everyone receives a good education, proper health care or that transport is available.
Several disadvantages also exist. It is these disadvantages that have let to many nations abandoning planned economies over recent years:
* There is no incentive for individuals to work hard in planned economies.
* Citizens cannot start their own businesses and so new ideas rarely come forward.
* As a result, industries in planned economies can be very inefficient.
A major problem faced by planned economies is that of deciding what to produce. Command economies tend to be slow when responding to change in peoples tastes and fashions. Planners are likely to underproduce some items as they can’t predict changes in demand. Equally, some products, which consumers regard as obsolete and unattractive, may be overproduce. This leads to delays and queues for some products.
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