Question 22. What is the classification of economic system ?
Answer 22. ON THE BASIS OF OWMERSHIP
1. CAPITALISTIC ECONOMY : capitalistic economy is also known as free trade economy. In this type of economy , goods are produce for sale in the market. There are market for all kinds of consumers goods and investment goods. The prices are determined by the market forces i.e demand and supply.
FEATURES :
1. Free private enterprise.
2. Profit motive.
3. Market mechanism.
4. Class conflicts.
LIMITATIONS :
1. Class conflict between owner and labour.
2. Unequal distribution of Income.
3. Exploitation of consumers.
4. Presence of cut throat competition in the market.
2. SOCIALISTIC ECONOMY : socialistic economy is also known as sendly plan economy. The mean of production is his own and control by the sate for central planning and social welfare objectives. The state is authorized to control the production and distribution.
FEATURES :
1. There is a presence of social ownership.
2. It deals with social welfare of the society.
3. There is a presence of least exploitation.
4. It deals with social equality.
LIMITATIONS.
1. There is a absence of personal stability.
2. It deals with improper allocation of resource.
3. There is a absence of market mechanism.
3. MIXED ECONOMY : Mixed economy is the combination of the elements of capitalistic economy and socialistic economy. In mixed economy, both private and public sector exists at the same time . Under this form of economic system the means of production are partially owned by the private sector and partly by the state.
FEATURE :
1. There is a presence of private and public sector at the same time.
2. The objective of mixed economy is profit motive as well as social welfare.
3. There is a presence of joined responsibility of both public and private.
LIMITATIONS:
1. It deals with lack of efficiency.
2. There is a delay of economic decision.
3. There is presence of more wastage.
4. There is a presence of high level of corruption.