Question

what is the differences between economic systems between colombia south america and United States?

Answer 1

An economic system is a mechanism with the help of which the government’s plan and allocate accessible services, resources, and commodities across the country. An economic system is the combination of the various agencies and entities that provide the economic structure that defines the social community. These agencies are joined by lines of trade and exchange goods. Many different objectives may be seen as desirable for an economy, like efficiency, growth, liberty, and equality. An economic system may involve production, allocation of economic inputs, distribution of economic outputs, landlords and land availability, households, financial institutions, firms, and the government. Alternatively, an economic system is the set of principles by which problems of economics are addressed, such as the economic problem of scarcity through allocation of finite productive resources.

Types of Economic Systems

· Planned systems

· Free market systems (capitalist)

· Mixed economies

Colombia has a Free market systems. The countries in South America switched over to the system of Free-Market economy from 1990s. This eventually pulled countries in South America out of the debt crisis. Here economic system based on supply and demand with little or no government control. Now in Colombia, the major economic activities include agriculture, industry, forestry, and mining. The economic system in which most businesses are owned and operated by individuals is the free market system, also known as “ capitalism”. In a free market, competition dictates how goods and services will be allocated. Business is conducted with only limited government involvement. The economies of the United States and other countries, such as Japan, are based on capitalism.

The United States has a mixed economy. It works according to an economic system that features characteristics of both capitalism and socialism. A mixed economic system protects private property and allows a level of economic freedom in the use of capital, but also allows for governments to intervene in economic activities in order to achieve social aims and for the public good. The U.S. is a mixed economy, exhibiting characteristics of both capitalism and socialism. Such a mixed economy embraces economic freedom when it comes to capital use, but it also allows for government intervention for the public good. The U.S. government controls part of the economy with restriction and licensing requirements, which includes involvement in such areas as education, courts, roads, hospital care, and postal delivery. The government’s role in a mixed economy can also include financial policies, such as monetary and fiscal policies.

These are the difference between the economic system of Colombia South America (free market or capitalist economy) and United States (mixed economy)

• Capitalism is an economic system wherein private companies and individuals own property and capital goods. The fundamental basis of capitalism is that the market (or the forces influencing the market) determines prices and production in the economy. A mixed economic system is an economy in which there exists private ownership by businesses and individuals (i.e., capitalism), but in which there is some degree of state involvement (i.e., socialism).
• A Mixed economies start from the basis of allowing private enterprise to run most businesses. The free market is an economic system based on supply and demand with little or no government control.
• Mixed economic systems are not state-owned economies, meaning the government doesn't own all of the means of production. In contrast, pure capitalism is a free, private economic system that allows voluntary and competing private individuals to plan, produce, and trade without coercive public interference.
• In capitalist economy most means of production are privately owned & operated Production, distribution, and pricing decisions are market-driven. In mixed economy it combines elements of market & command economy.
• In mixed economy Government plays a role in allocating & distributing resources (taxes). In capitalist economy production, distribution, and pricing decisions are market-driven
• In a mixed economy, the state allows varying degrees of freedom between producers and consumers. A mixed economy places varying limits on property rights as well. Property owners are restricted with regard to how they exchange with one another. These restrictions come in many forms, such as minimum wage laws, tariffs, quotas, Free markets are characterized by a spontaneous and decentralized order of arrangements through which individuals make economic decisions. Based on its political and legal rules, a country's free market economy may range between very large or entirely black market.