Australia's Economic System

Each society is faced with a problem concerning their economic state. The economic problem is that there are limited resources in relation to unlimited wants. This problem brings about the need for a system to answer questions like what to produce, how to produce, how much to produce and how to distribute production. An economic system is the organisational and institutional pattern through which choices are made about which wants to satisfy, and how to allocate resources to do this. The different economic systems include planned economies, market economies and mixed economies. Australia has a mixed-market economic system in which there is a mixture of control by the government and freedom of individual enterprise and in which the basic economic
Some goods and services may not be provided under a pure market economy such as public transport and parks. Governments provide those goods that are beneficial to the community. It is also sometimes better for essential goods and services to be provided by government, rather than being left to private individuals such as defence and security. The government may also choose to influence the public sector through grants and subsidies. For example, specific sectors that are in need of assistance can be assisted through industry assistance and development spending. The government also reallocates resources to public sector agencies that provide services to the community such as Australian Bureau of Statistics. The government can set regulations to prevent the exploitation of consumers and legislate to ban the production of undesirable goods and services e.g. illicit drugs. The government can impose safety standards and production methods that will not harm the environment. Australian individuals have quite a lot of economic freedom however the Australian economy works within an overall framework of government regulations, which safeguard society. The government legislates hours of work and minimum wages, sets prices for some products and pays subsidies and social service benefits. The allocation of resources and the distribution of what is produced still takes place, largely through the market or price mechanism but the government intervenes to grant cash subsidies, charge taxes, borrow money and run its own