Defining Capitalism and Command Economies

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Defining Capitalism and Command Economies of Economics
“Economics is the study of how wealth is created and distributed” which, includes “the products produced and sold by business” (Pride, Hughes, & Kapoor, 2011, p. 10). When studied, it is the science or the financial considerations of the buying, selling, and the production of goods and services that are consumed by our world and its people. There are two different perspectives when studying economics. Microeconomics and macroeconomics are different in that microeconomics is the study of the individual and business decisions that affect the economy, whereas macroeconomics is the study of national and global economy (Pride et al, 2011, p. 10). Together, micro and macroeconomics examine the decisions of individuals, businesses, the government, and society and how all of these people deal with making and distributing the money that is derived from the production of services and goods. These decisions combined with the prosperity of the nation, determine the economy. There are two different economic systems in today’s world. Capitalistic nations and those nations that are run under command economies are the two systems that can be found across the globe. The two systems differ in two major ways. First, they vary in the ownership of the factors of production. These factors are the land and natural resources, labor, capital, and entrepreneurship (Pride et al, 2011, pp. 10-11). Second, the way that particular nations system answers four questions listed by Pride, Hughes, and Kapoor (2011), determines a nation’s economy (p. 11). Those four questions listed are concerning what products, how the products, for whom the products are produced and who owns and controls the major factors of production as aforementioned. One major understanding on the impact a nation’s economic system has on all the economic activities of its citizens is when there is a consideration that a country’s system determines how...
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