Economic System

An economic system allocates a nation's resources among its citizens. Different systems vary in who owns and controls these resources, which are known as the factors of production (labor, capital, entrepreneurs, and natural resources, as well as physical resources and information resources). A command economy relies on a centralized government to control all or most factors of production and to make all or most production and allocation decisions. In market economies, individuals—producers and consumers—control production and allocation decisions through supply and demand. Most countries are dependent on mixed market economy—a system featuring characteristics of both command and market economies (Mankiw, ...