Types of economic systems
An economic system is how a country chooses to control its economic resources. There are different economic systems in operation around the world.
The three main economic systems are:
- Free economy
- Controlled economy
- Mixed economy
Free Economy
A free economy is an economy in which anyone is free to make decisions about the production of goods and services. Any citizen of the country with an idea for a business can set it up, as long as it is legal, with little or no interference from the government.
Example: the US economy
Controlled Economy
A controlled economy is an economy in which the government has complete control of the production of goods and services. Citizens are not free to set up their own business, and all businesses are owned by the government
Example: North Korean economy
Mixed Economy
A mixed economy is an economy in which the government and private businesses share the production of goods and services. The government controls certain areas of production(e.g. transport, energy, education and healthcare), but citizens are also free to set up businesses.
Example: The Irish economy.