Types of Economies

 

Economies can broadly be classified into three different types -

 

1. Controlled Economy

2. Economy

3. Mixed Economy

 

In every country economic activities are controlled by the government. But the extent to which the government controls the economic activities differentiates these economies.

 

Controlled economy	Market economy	Mixed economy
Economic decisions are taken by government or some central authority	Economic decisions are taken by the free forces of the market	Economic decisions are taken by both government and market forces
Social welfare is the main motive in decision making	Profit maximisation is the main motive in decision making	Profit maximisation and social welfare both are the main motive in decision making
The public sector dominates the economic activity	The private sector dominates the economic activity	Both public and private sector have their fair share in economic activity
Most of the countries resources are controlled by government	Most of the countries resources are controlled by the private sector	Both public and private sector have their fare share in countries resources
The price of goods and services are controlled by the government	Price of goods and services are decided by the free forces of market	The price of goods and services are decided by the free forces of market but are regulated by the government
Consumer do not have many choices, as the government decides what to produce and what not to produce	Consumer have many choices	Consumer have choices and government ensure the supply of essential goods
Example - North Korea, Cuba	Example - USA, Japan, Germany	Example - India, France

 

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