Question

In the United States of America, there is wide spread inequality among the people. Rich becomes richer and poor becomes poorer. The reason for this inequality is the economic system that they follows. What economic system do you think United States is following? Identify and explain. Also, evaluate four advantages and disadvantages of this economic system in detail.                             [Answer in 300 – 400 words]

pls your own words, dont copy from anywhere

Answer 1

The economic system of US is of private ownership ie capitalistic . This is also known as free enterprise economy.Under Capitalism all firms,factories and other means of production are the property of private indivduals  and firms .,Profit is the main motive.A Capitalist economy works through price system.There is private property and freedom of ownership, right of private property,competition among entrepreneurs and cooperation among workers, society is divded into haves and have nots.and there is profit motive.

Advantages of capitalism-Production is carried according to the consumers' need. The producers produce goods according to the needs of the consumers.So the consumers get maximum satisfaction.

Again there is higher rate of capital formation which leads to economic growth.People save a part of their income so that it can be invested to earn more income.When savings are invested the rate of capital formation increases.which increases economic growth .

Complete freedom of choice which means the right to earn and retain property.

Efficient production of goods and services . Every entrepreneur wants to produce goods as lowest cost.Consumers get the highest quality goods at the lowest price.

Disdavantages--inequality in the distribution of wealth and income.The system of private property acts as a means of incresaing inequalities among different people .  Big enterprise can be started by the wealthy .

There is class struggle in the capitalist economy.The society is divided into haves and have nots . Haves are the rich people and have nots are the wage earning people without property.The haves exploit the have nots.

There is high social cost as factory owners who work for profit , are not concerned about the people who are harmed by their production.The environment gets polluted because the factory wastes are not properly disposed.Slums grow as factory owners are not provided houses.

There is unemployment and underemployment-Lrage part of labor force becomes unemployed during depression.Workers do not get full time employment except under boom.