Assignment on Economic System

1839 WordsSep 24, 20128 Pages
An economic system is the combination of the various agencies, entities (or even sectors as described by some authors) that provide the economic structure that defines the social community. These agencies are joined by lines of trade and exchange along which goods, money etc. are continuously flowing. An example of such a system for a closed economy is shown in the flow-diagram. The economics system involves production, allocation of economic inputs, distribution of economic outputs, landlords and land availability, households (earnings and expenditure consumption of goods and services in an economy), capitalists, banks (finance institutions) and government. It is a set of institutions and their various social relations. The Four main…show more content…
Disadvantages of Market Economic System: i) Since market does not exist for some resources, only some environmental resources might be used and exchanged in the society. ii) The long cycle of production of some crops (e.g. timber and tree crops) does not allow for rapid adjustment of demand and supply so gluts and shortages often follow in

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