I also need to include an analysis of my expectations for changes in the main macroeconomic variables. How do I go about with that? Thanks!
An economic system consists of various processes of organizing and motivating labor, producing and distributing services, and use of better technology for future production. There are three types of economic systems:
1. Free market economies – This economic system depends on markets to solve economic problems whereas markets enable the mutual beneficial exchange between producers and consumers. In a free market economy, resources are allocated through a self-directed market by allowing direct interaction between consumers and producers.
2. Command economies – In this system, scarce resources are allocated by the government. This method is also said to be part of central planning, and the economy that uses central planning is also called command economies. In this method, the government commands the resources. Command economy has some advantages over free market. At the time of crisis such as a natural disaster, free markets fail to allocate resources efficiently. In times like this, command economies work as the government commands and follows the remedies to compensate for these failures.
3. Mixed economies – This type of economy is partially run by free market while part of it is run by the government. Mixed economies allow private enterprises to run most businesses. Governments also intervene in certain areas of the economy such as regulation and spending money on public services.