planned/free market economy
Q 1 V Explain what economic theory would suggest are the benefits and disadvantages of a planned economy when compared to a free market economy.Scarcity is the main economic problem faced by any country in the world. We must first define this before we can talk about why countries choose a planned economy or a free market economy.When defining scarcity we have to discuss human wants. Most people want more money to buy more goods and services, thus human wants are unlimited.On the other hand the amount of products and services that can be produced or offered are limited thus creating the problem of scarcity. One definition of scarcity offered buy J Sloman is "the excess of human wants over what can actually be produced".So we have established that every country in the world has to tackle the problem of scarcity and what this means. However countries differ considerably in how they deal with the problem. The main difference that can be measured is the amount the government takes control of the economy.The easiest way to illustrate this is through a line diagram:-As you can see there is one extreme which is the planned economy, this is based on most economic decisi
On the other hand Fidel Castro has always promoted a top-class education and public health systems which could also offer a route to economic prosperity. This is not true, there seems to be an erratic relationship between the two. Technological advances would suggest that the quality of goods and services would improve, but they might fall in price at the same time. There are a number of reasons to back this up. The free market controls far too much of the world and command economies will not be able to compete. After reading a number of articles and putting economic theory into practice I have came to the conclusion that Cuba will have change economically and politically in order to create a stable economic future for itself and its people. For instance if the population doubles whilst national income quadruples people are likely to be nearer twice as well off than four times. In the past Cuba has generally used this wealth of knowledge for its own people, but within its current economic environment is trying to convert this into money for its own economic prosperity. To get a good perspective on where an economy lies we must analyse one extreme and determine the benefits and disadvantages and compare them with that of the opposite extreme. At the other end of the spectrum lies the free market economy which is based on economic decisions being made buy households, firms and individuals. Countries like China have started opening there gates to the free market but not fully and are seeing and gaining the advantages they need. Changes in population can also affect the GDP, thus it essential to compare national income per person. Taxes such as VAT, income tax and national insurance contributions, impose a burden on workers and businesses.
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Acceptance Essays
