Types of economies

Types of economies

1) Centrally planed (command) economy: typical for socialistic countries, government makes all decisions about production and compsumption. It decides what, how and for whom it will be produced. Government makes a plan in which it sets target levels of output for all firms in economy. The state is major owner of factories and land.

2) Free market economy: an economic systém without any government intervention, all resources are ownred by private individuals, economic decisions are made acording to the forces of supply and demand

3) Mixed economy: an economic systém where both the goverment and private sector interact in solving economic problems. The government provides institucional and legal environment, regulates economic life with help of directives, restrictions, transfer payments and taxation.

4) Transition economy: new type of economy, including all economies which are being transformated from centrally planned to free market economy. Goverment tries to decrease it's interventions on economy.