Different types of economies include local, market, and command. Market-oriented economies emerge from growing local economies, while emerging markets protect private property. Free markets are established economies with little government intervention. All economies go through growth, peak, contraction, and depression phases.
An economy is the central environment in which individuals buy, sell or trade goods and services. There are many types of economies, such as local, market and command, among others. The different types of market economy include emerging and free market oriented market. Market-oriented economies are just starting out or mixed with a central planner; emerging markets tend to open up to free market principles; and free-market economies are established economies with little or no government intervention. Most types of market economies will go through these stages at some point.
Market-oriented economies tend to kick in when the local economy starts to grow. For example, a barter system, or one in which there is a common economy, may move towards a market-oriented economy. These types of market economies also occur where there is a strong central government. Even if a market economy system is in place, the government or other central agents control the resources, both in their distribution and use. Market principles are still at play, even though individuals don’t always – if ever – have the capacity to act in their own interests for economic reasons.
Emerging market economies are beginning to organize more broadly. Many young villages may have several small local markets that carry out economic activities. An emerging market economy begins when all these smaller markets come together and the nation begins to grow and expand its opportunities. The protection of private property is typically a central element of an emerging market economy. Here, individuals are able to keep the premiums they earn from economic activities, giving them the ability to better themselves and their families.
Free markets are the endgame between different types of market economy. In this stage, individuals and the nation in which the economy exists act in their own self-interest, which are key principles for international expansion. The nation typically sets standards for trade – both imports and exports – with other countries to expand. Through these actions, the economy continues to grow and offers cheap goods and services. Despite the highest level of market economies, there is still room for growth and expansion.
Market economies generally fall under business cycle principles. These phases are growth, peak, contraction and depression. Every economy moves through these stages at some point. The length and frequency, however, depend on the types of market economy in the nation.
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