Economic Systems of the World Defined In Simple Terms.

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Economic System refers to mechanism dealing with production,distribution,exchange and consumption of goods and services in a particular society. 

Elements of Economic Systems Can be Divided into 4 Main Sub Components

#1: PRODUCTION

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Production is a process of combining various material inputs and immaterial inputs (plans, know-how) in order to make something for consumption (the output). It is the act of creating output, a good or service which has value and contributes to the utility of individuals

#2: DISTRIBUTION

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In economicsdistribution is the way total output, income, or wealth is distributed among individuals or among the factors of production (such as labour, land, and capital). In general theory and the national income and product accounts, each unit of output corresponds to a unit of income.

#3: EXCHANGE

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Exchange. When goods and services are given away, purchased, sold, or traded, there are potentially two components of the exchange–pureeconomic gain and social gain. Both of these motives usually occur at the same time in non-marketeconomies.

#4: CONSUMPTION

consumptionin economics, the use of goods and services by households. Consumption is distinct from consumption expenditure, which is the purchase of goods and services for use by households. Consumption differs from consumption expenditureprimarily because durable goods, such as automobiles, generate an expenditure mainly in the period when they are purchased, but they generate “consumption services

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To conclude note that there’re many different types of economic systems,therefore each one explains in different footings so don’t get confused when you come across similar articles but you should appreciate my hard work in compiling and I made it very simple and easy for you already!

Thank you for visiting my site and hope to meet you on other related topics to cover in the future.

By BloggerDwaightz.

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