Economy comprises all the activities involved in the production of goods or services and their consumption by the buyers. Hence the economy covers all the entities, i.e., individuals, large business enterprises as well as government. The economy is all about making the correct balance between the supply and demand. The economy of a region is affected by various factors. Some of the factors are mentioned below:
• Technology advancement
Types of economies
There are four types of economies. Basic information about these is mentioned below.
1. Traditional economy: as the name suggests, it is the most ancient form of economy. In this kind of economy, production is done on the basis of customs, traditions, beliefs, etc. The best thing about this kind of economy is that there is minimum wastage as far as resources are concerned. Such practices help the societies in preserving their traditional practices.
2. Command economic systems: command economy is a step ahead of the traditional economy. In this kind of economy, the power lies with a centralized system. This economy is generally found in regions which have a surplus of valuable resources. In such situations, mostly government regulates everything related to these valuable resources. Be it machinery or the facility itself; everything comes under government control.
3. Market-based economy: This kind of economy is based on the basic rule of demand and supply. Such economy results in the free flow of products or services. This kind of economy balances itself naturally. However, the truth is there is no such economy which is purely market-based.
4. Mixed economy: this kind of economy is also known as the dual economy. This kind of economy is a mix of command and a market-based economy. In such kind of economies, government controls few key areas whereas the rest of the control on the market is free from government interference.
The Economy of any region is not stable, and it keeps on evolving. The pace of evolution depends on the availability of resources as well as the technological innovations.