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Econ System Report

Econ System Report. By Grace Yun. Command Economy - Vietnam. State determines resource allocation Doesn’t always make the right choice – poor management Economy experienced rapid growth Slowed down – recently at 4% growth Inefficient state enterprises Approaching bankruptcy

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Econ System Report

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  1. Econ System Report By Grace Yun

  2. Command Economy - Vietnam • State determines resource allocation • Doesn’t always make the right choice – poor management • Economy experienced rapid growth • Slowed down – recently at 4% growth • Inefficient state enterprises • Approaching bankruptcy • High inflation rate – 12%

  3. Mixed Economy (European socialism) - Finland • Unemployment has been decreasing • Small GDP deficit • Approximately 1% • There are private enterprises • Example: Nokia • Loss of competition • Led to increase in costs and decrease in exports

  4. Market Economy - AUstralia • Improving GDP growth rate • 4.3% higher in 2012 than 2011 • Effective coordination within economy • “Strongest economy in the developed world” • Low unemployment rate • 5.2%

  5. Comparison – command & Mixed

  6. Comparison – Command & Market

  7. Comparison – Market & Mixed

  8. Overall comparison • SIMILARITIES: all three economies have producers, suppliers, goods, services, price, and income. They can also all have low unemployment rates and face limited competition. • DIFFERENCES: the level of government intervention in the market is the factor that changes in the three economies – this influences incentives to be efficient. The less moral hazards there are, the more efficient companies try to be.

  9. Command Economy - Vietnam

  10. Continued - Vietnam • ABILITY TO ALLOCATE RESOURCES EFFECTIVELY: • In theory, Vietnam values equality over efficiency – meaning that in command economies the the allocation of resources is not very effective; • This is apparent in the 12% inflation rate and also by the fact that numerous companies are close to being insolvent

  11. Mixed economy (european socialism) - Finland

  12. Continued - Finland • ABILITY TO ALLOCATE RESOURCES EFFECTIVELY: • In theory, there should be a balance between equality and efficiency in mixed economies – as Finland is more command-leaning, equality would be prioritized; • Resource allocation is very effective – i.e. schools are able to provide free meals, health care, and counseling to their students

  13. Market Economy - Australia

  14. ConTinued - Australia • ABILITY TO ALLOCATE RESOURCES EFFECTIVELY: • In theory, because individuals are able to act according to their self-interest, resources should be allocated effectively, with each person trading something to get what he/she wants; • This is manifest in the way that the government has been able to increase spendings in a variety of areas such as food, health, education, and transportation. • It is also shown in the salary increases that many companies granted to their workers

  15. Thank YOU

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