0746wZ Economy Archives - Types of Economies - Intelligent Head Quarters


An economy is a system whereby goods are produced and exchanged. Without a viable economy, a state will collapse. There are three main types of economies: free market, command, and mixed. The chart below compares free-market and command economies; mixed economies are a combination of the two. Command economies are often very inefficient because these economies try to ignore the laws of supply and demand. In most cases, a black market arises to fill the demands overlooked by the central plan. Economic growth overall is often slower than in states with free markets. Some command economies claim to act to promote economic equality, but often the elites in the government live far better than others. Although command economies were once considered viable alternatives to free-market capitalist economies, poor economic performance in countries with planned economies proved that capitalism was much more efficient. During World War II, the United States largely took control of the American economy, forcing businesses to build tanks, planes, and ammunition instead of normal consumer goods.