Economy Is An All-Inclusive Term

Economy is usually understood as a measure of financial status of a country or a region. However, economy is a term that refers to much more than that. It is a comprehensive terms that encompasses various aspects of the country such as labor, land resources, trade, demand for resources and services, distribution of resources and capital. There are a number of socio-economic factors that decide the economy of a country. Important among them are standard of living, social organization, available natural resources, usage pattern, endowment, geography and ecology. Based on these factors, policy makers decide how the country should be run. All these factors together make up the economy of the country. Although economy is depicted in financial terms, it is a comprehensive study of several other factors.

Different Kinds Of Economies

There are different kinds of economies and different countries in the world deal with different economies. There are four main kinds of economies by definition. They are feudalism, capitalism, socialism and communalism. Feudalism is the kind of economy where power rests with a few and other work for those leaders in exchange of protection. This kind of system is almost outdated in the present times. The second type of economy is capitalism. In this kind of economy, individuals can make their own investments in the market and produce goods. Individuals have the right to property under this system. Socialism is the concept where means of production are owned by the government but individuals do have right to own property. This kind of economy focuses on bringing equality between the rich and poor in the society. Communism is the kind of economy where individuals cannot have personal property. Rights of citizens are very limited and there are no classes among people. Government of the country is omnipotent in this kind of economy. There is a fifth kind of economy as well. It is called a mixed economy and here, the socialism and capitalism coexist. In the recent times, this kind of economy is followed by most of the countries in the world.

Role Of Government And Private Sectors In Different Economies

All kinds of economies work in different characteristic patterns of government and private sectors. In the feudalist system, the private sector has no rights. In the capitalist sector, private sector is largely empowered and works in partnership with the government rather than as a subordinate. In socialist economy, government has an upper hand and private sector exists more in theory than in reality. Communalism is the form of economy where all powers rest with the government and private sector leverage is very limited or inexistent.

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