IntroductionEconomic systems are the organized way in which a state or nation allocates its resources and distributes goods and services in the national community. An economic system is generally defined as a country's plan for its services, goods produced, and exactly how its economic plan is implemented. There are three types of economic systems: command economy, market economy and mixed economy. The command economy is sometimes also called the planned economy. The expectation of this type of economy is that all major decisions relating to construction or production, distribution, prices of raw materials and services are all made by the government. However, in the market economy, national and state governments play a marginal role. The market hypothesis plays an important role in deciding the right path for the economic development of a country. The mixed economy combines elements of both the command and market economies into a single interconnected system. Some characteristics of market and command economic systems are taken to form this type of economy. The market system is clearly the most effective economic system. A market economy can therefore also be known as a free market economy. It is a type of economic system in which trade and exchange of goods, services and information occurs. The phrase is normally applied to countries or management regions that follow this approach. It mainly works based on market forces i.e. supply and demand. Every commodity allocates and distributes based on the "price" principle. In general, the price of a commodity increases dramatically when its demand exceeds supply and when the opposite occurs.| |Since markets are governed by law... middle of paper... their own markets for products, and the fact that they have no control over the taxes they pay is one of the problems. Traders often complain that tax rates are too high for the services they provide. The old communist regimes of Eastern Europe were central command economies, yet command was not total. Other examples are Malaysia and China which use a mixed economy. All in all, the statement shows that the market economy is clearly the most important and effective economic system due to the freedom to make decisions. Furthermore, some of the countries using the totally controlled economy are moving towards a mixed economy, while the countries using the mixed economy are making progress towards the market economy. Bibliography1. Sloman, John Economics.2. http://www.economywatch.com3. http://en.wikibooks.org/wiki/Main_Page4. http://www.dict.cn