Planned Economy: A planned economy or directed economy is an economic

system in which the government or workers' councils manages the economy. Its
most extensive form is referred to as a command economy, centrally planned
economy, or command and control economy. In such economies, the state or
government controls all major sectors of the economy and formulates all
decisions about their use and about the distribution of income, much like a
communist state. The planners decide what should be produced and direct
enterprises to produce those goods. Planned economies are in contrast to
unplanned economies, such as a market economy, where production,
distribution, pricing, and investment decisions are made by the private owners of
the factors of production based upon their own and their customers' interests
rather than upon furthering some overarching macroeconomic plan. Less
extensive forms of planned economies include those that use indicative planning,
in which the state employs "influence, subsidies, grants, and taxes, but does not
compel." This latter is sometimes referred to as a "planned market economy."

Free Market Economy: A market economy is a realized social system based on the
division of labour in which the prices of goods and services are determined in a
free price system set by supply and demand. This is often contrasted with a
planned economy, in which a central government determines the price of goods
and services using a fixed price system. Market economies are contrasted with
mixed economy where the price system is not entirely free but under some
government control that is not extensive enough to constitute a planned
economy. In the real world, market economies do not exist in pure form, as
societies and governments regulate them to varying degrees rather than allow
self-regulation by market forces. The term free-market economy is sometimes
used synonymously with market economy, but, as Ludwig Erhard once pointed
out, this does not preclude an economy from having social attributes opposed to
a laissez-faire system.

Mixed Economy: A mixed economy is an economic system that incorporates
aspects of more than one economic system. This usually means an economy that
contains both privately-owned and state-owned enterprises or that combines
elements of capitalism and socialism, or a mix of market economy and planned
economy characteristics.

There is not one single definition for a mixed economy, but relevant aspects
include: a degree of private economic freedom (including privately owned
industry) intermingled with centralized economic planning (which may include
intervention for environmentalism and social welfare, or state ownership of some
of the means of production).Matter



Subject matters

The basic subject matter of economics is the study how people-individuals, firms and nations-maximise their gains
from their limited resources and opportunities. In other words economics is the study of how people allocate their
resources to their alternative yes for deriving maximum possible gains from limited resources. For the purpose of
economic analysis, people are classified under different categories of decision-makers. They are (i) consumers-the
users of all final goods and services, (ii) firms- the producers of all goods and services and (iii) owners and users of
resources. The term gain has different connotations for different sections of economic decision makers-consumers,
firms and resource users. For consumers, gain means the total utility or satisfaction they derive from the consumption
of goods and services; for producers, it is production and profit that they make from the use of resources at their
disposal; for resource users especially labour, it means wage income or earning per unit of time; and for a nation,
gain means national output, total employment, this standard of living and economic welfare of the society.

Thus, economics as a behavioral science, studies how consumers maximise their total utility; how producers achieve
the goal of profit maximization; and how resource owners maximin returns or earnings from the use of their
resources. Economics studies also the working mechanism of the market system and the behavior of the market
forces-demand and supply

When the optimizing or maximizing behavior of the people-consumers producers and resource owners is analysed at
the individual level, it constitutes a part of microeconomics. The study of price and output determination at individual
commodity level is also the subject matter of microeconomics. Therefore, all studies made at the level of the
individual decision-makers and individual products constitute the subject matter of microeconomics.

For the purpose of macroeconomic studies, all microeconomics variables are converted into macroeconomic variable.
Let us see how microeconomic variables are converted into macroeconomic variables. The amount that an individual
consumer decides to spend on consumer goods and services is individual consumption expenditure. Thais is a
microcosmic variable. When the expenditure made by al the individual consumers on all the goods and services are
summed up, it gives aggregate consumption expenditure, which is a macroeconomic variable. The study of the
behaviors of the aggregate consumption expenditure and its determinants is the study of a macroeconomic variable,
similarly the study of how an individual firm decides how much to produce an individual good, say, a Pc, is a
microeconomic study, but when one analysis the behavior of the total output of all the goods and services produced
by all the firms over period of time, one studies the trend in aggregate production or national output, this makes a
macroeconomic study.