DEFINITION
-An economy system was operation without government intervention.
FEATURES
- Decisions decided by individual and firm ONLY.
- Land and capital are privately owned.
- The price mechanism changes in price in response to change in demand and supply have the effect of making demand equal to supply.
ADVANTAGES
- Individual free to make their own economic choice
- Freedom to workers and firm to choose where to work and what method to use for production.
DISADVANTAGES
- Existence of wide gap between the rich and the poor
- Existence of unemployment problem
Planned Economy
Definition
- Fully controller by government.
- Decision are taken by government or central authorities.
- Land and capital are collectively owned. The government or central authorities plan the allocation of resources.
- Decision of allocation of resources always are in the interests of society as a whole and with specific national goals.
- Unemployment could be largely avoided if the government carefully planned the allocation of labour.
- Same income distribution.
- Produces the goods and services at efficiency level.
- Mistake decide in economy (decision made by some people only).
- Technology and innovation are undeveloped because all production are decided by government.
Mixed Economy
Definitions
A economy system that incorporates a mixture of private and government ownership or control(capitalism and socialist).
Features
# This system use market mechanism and allow government intervention in economy activities.
# Price level determine by price's mechanism but basic economy's problem resolved together between government and private.
# Individual and firm free to have properties.
Advantages
# The government will try to reduce gap of income between rich and poor people(taxes and subsidies).
# Government will control the existence of monopolies.
Disadvantages
# Business freedom is not totally offered for enterprise.
Islamic Economy
Definitions
Economy which uses Allah's creation natural resources with most efficient and fair way based on Islamic laws.
Features
* Al Quran and Hadith was the main sources in Islamic economics' activities.
* Individual free to own property
* Individual no give priority to profit in business
* Fair competition permitted
* Free to decide in economics
Advantages
* Good in the world and afterworld
* Free competition