SUBMITTED TO..

Miss. Paramvir Kaur

SUBMITTED BY..

Hardeep Grewal

Roll No. 1206463

BBA 5th Semester

An economic system or economy isAn economic system or economy is a a system designed system designed by a nation to utilise her resources for the purpose of by a nation to utilise her resources for the purpose of satisfying the needs and wants of people.satisfying the needs and wants of people.

An An economic system comprises all the institutions, economic system comprises all the institutions, organisations and policy mechanism by which the organisations and policy mechanism by which the people of a country manage and utilise the country’s people of a country manage and utilise the country’s resources to obtain the things they need. It is the resources to obtain the things they need. It is the network of economic relationship in the society arising network of economic relationship in the society arising from the organisation and mode of production, from the organisation and mode of production, distribution, consumption and exchange.distribution, consumption and exchange.

DEFINITION OF ECONOMIC DEFINITION OF ECONOMIC SYSTEM………..SYSTEM………..

“ “ An economic system consists An economic system consists of those institutions which a of those institutions which a given nation or group of nations given nation or group of nations has chosen or accepted as the has chosen or accepted as the means through which their means through which their resources are utilised for the resources are utilised for the satisfaction of human wants.”satisfaction of human wants.”

TYPES OF ECONOMIC SYSTEMTYPES OF ECONOMIC SYSTEM

A capitalist economy A capitalist economy otherwise called as otherwise called as the free market the free market economy activity economy activity where the means of where the means of the production are the production are privately owned.privately owned.

“ “ Capitalism is a Capitalism is a system of economic system of economic organisation featured organisation featured by the private by the private ownership and the ownership and the use for private profit of use for private profit of man-made and nature man-made and nature made capital.”made capital.”

1. PRIVATE PROPERTY

2. LARGE SCALE PRODUCTION

3. PROFIT INSTITUTIONS

4. COMPETITION

5. PRICE MECHANISM

6. WAGE INSTITUTION

7. MONEY AND CREDIT

8. BUSINESS ORGANISATION

9. MARKET ECONOMY

MERITS OF CAPITALISMMERITS OF CAPITALISM

1.INCREASE IN PRODUCTION

2. QUALITY PRODUCTS AT LOW PRICES

3. PROGRESS AND PROSPERITY

4. MAXIMISES WELFARE

5.OPTIMUM USE OF RESOURCES

6. FLEXIBLE SYSTEM

Leads to monopolyLeads to monopoly InequalitiesInequalities Consumer’s sovereignty a mythConsumer’s sovereignty a myth Depression and unemploymentDepression and unemployment Inefficient productionInefficient production Non- utilisation of resourcesNon- utilisation of resources Class conflictClass conflict

DEMERITS OF DEMERITS OF CAPITALISM…….CAPITALISM…….

Socialism is an economic system where the means of production are either owned or controlled by the state and the resource allocation , investment pattern, consumption,income distribution etc.are directed and regulated by the state. Socialism as an alternative to capitalism is an economic system which is controlled and regualted by the government so as to ensure welfare and equality of opportunity to the people.

“ In socialism the role of the state is central. It owns the means of production and directs economic activity.”

SALIENT FEATURES OF SALIENT FEATURES OF SOCIALISM……….SOCIALISM……….

Social ownership of means of Social ownership of means of production.production.

Social welfare is the main aim.Social welfare is the main aim. Central planning.Central planning. Equality of income and Equality of income and

opportunity.opportunity. Classless society. Classless society.

MERITS OF MERITS OF SOCIALISM……..SOCIALISM……..

Greater economic efficiency.Greater economic efficiency. Greater welfare due to less Greater welfare due to less

inequality of income.inequality of income. Absence of monopolistic Absence of monopolistic

practices.practices. Absence of business Absence of business

fluctuations.fluctuations.

DEMERITS OF DEMERITS OF SOCIALISM………SOCIALISM……… Loss of consumers’sovereignty.Loss of consumers’sovereignty.

No freedom of occupation.No freedom of occupation.

Misallocation of resources.Misallocation of resources.

Bureaucratic. Bureaucratic.

MIXED ECONOMY ……..MIXED ECONOMY ……..

Mixed economy shares features of capitalism and Mixed economy shares features of capitalism and state capitalism. It is characterised by the co-state capitalism. It is characterised by the co-existance of public and private sectors and the over existance of public and private sectors and the over all government regulation of the economy. In a all government regulation of the economy. In a mixed economy private enterprise is permitted to mixed economy private enterprise is permitted to function and flourish subject to control and function and flourish subject to control and restrictions by the govt. The extent of govt. control restrictions by the govt. The extent of govt. control over business and its interference in economic over business and its interference in economic activity varies from country to country.But a mixed activity varies from country to country.But a mixed economy aims at blending together the best control economy aims at blending together the best control socialist or communist economy with the best of socialist or communist economy with the best of free enterprise in a capitalist economy. India has free enterprise in a capitalist economy. India has adopted the mixed economy system.adopted the mixed economy system.

“ “ Mixed economy is that economy in which both Mixed economy is that economy in which both public and private institutions exercise economic public and private institutions exercise economic control.”control.”

SALIENT FEATURES OF SALIENT FEATURES OF MIXED ECONOMY……….MIXED ECONOMY……….

Co- existence of public and private sectors.Co- existence of public and private sectors. Individual freedom.Individual freedom. Economic welfare.Economic welfare. Economic planning.Economic planning. Price mechanism.Price mechanism. Free and controlled economic Free and controlled economic

development.development. Government intervention.Government intervention.

Achievement of faster economic Achievement of faster economic growth.growth.

Best allocation of resources.Best allocation of resources. Balance between the private and Balance between the private and

public sector.public sector. Establishment of a welfare state.Establishment of a welfare state. Heavy capital investment through Heavy capital investment through

planned effort.planned effort.

1.

MERITS OF MIXED ECONOMY……..

DEMERITS OF MIXED DEMERITS OF MIXED ECONOMY………ECONOMY……… Undue emphasis on the growth of Undue emphasis on the growth of

public sector.public sector. Inefficient of both the sectors.Inefficient of both the sectors. Inefficient control of the private Inefficient control of the private

sector.sector. Economic fluctuations.Economic fluctuations. Failure to solve demographic and Failure to solve demographic and

unemployment problems and unemployment problems and inflation.inflation.

Extensive and corrupt bureaucracy.Extensive and corrupt bureaucracy.