LO 2-4.

Analyze the trend toward mix economies

There are three types of economies: free-market economy, command economy and mixed
economy. Firstly, we will explain what is free-market economy. The meaning of free-market
is a market or economy in which economic actors are able to act freely, and its goods and
services are determined by the market. The free market is also sometimes used as a synonym for
laissez-faire capitalism. Secondly, the economy that the government, plans and controls the
production and distribution of goods and services is called command economy. This type of
economy is usually associated with countries governed by communist or socialist regimes.
Basically, the countries that apply command economies have authoritarian economic
structures where political or social hierarchies are solely responsible for deciding about the
economy. Generally, A command economy differs from a free market economy, where the
pricing of goods and services is determined by the market’s chain of supply and
demand. Finally, a mixed economic system is a system that combines aspects of
both capitalism and socialism. A mixed economic system protects private property and
allows a level of economic freedom in the use of capital, but also allows for governments to
interfere in economic activities in order to achieve social aims. Những sản phẩm và dịch vụ
như là xăng, điện, nước, đất đai thì là sở hữu, buôn bán tư nhân nhưng tất cả đều thuộc
quyền quản lý của nhà nước.

https://learn.robinhood.com/articles/7Ium1gWWf54wd5wqr1XosD/what-is-a-free-
market/
https://learn.financestrategists.com/finance-terms/command-economy/?
gclid=Cj0KCQjw166aBhDEARIsAMEyZh6-
OTTNiZSPxmD_VZrOYPS9ywrjipeeemy4gPcpyHVp1HdtyU9Po1kaAt0_EALw_wcB

LO 2-5
UNDERSTANDING THE U.S ECONOMIC SYSTEM
In the topic of The United States, we have four terms: key economic indicators,
productivity in the United States, Productivity in the Service Sectors and the Business
Cycle. Now, let’s learn about each term to know what its concepts means. In term of The
key economic indicatior, there are three main indicators which are gross domestic
product, the unemployment rate and inflation and price indexes
- Key Economic Indicators
 Gross Domestic Product
+ Gross Domestic Product (GDP): measures the value of the final goods and
services produced in a country in a given year.
+ Gross Output (GO): a measure of total sales volume at all stages of production.
 Unemployment
+ The Unemployment Rate: the percentage of civilians at least 16 years old who
are unemployed and tried to find a job within the prior four weeks.
+ Four types of Unemployment:
1. Frictional unemployment
2. Structural unemployment
3. Cyclical unemployment
4. Seasonal unemployment
 Inflation and Price Indexes
1. Inflation Indexes
+ Inflation: The rise in the prices of goods and services overtime
+ Disinflation: occurs when price increases are slowing
 + Deflation: declining in prices
+ Stageflation: occurs when the economy is slowing but prices are going up
2. Price Indexes
+ The consumer price index (CPI): measures the pace of inflation or deflation
+ Core inflation: CPI minus food and energy costs
+ Producer price index (PPI): measures the change in price at the wholesale level
- Productivity in the United States
+ Productivity in the U.S. has risen due to the technological advances that have made
production faster and easier.
+ Productivity in the service sector grows more slowly because of fewer
technologies.
- Productivity in the Service Sector
+ The higher the productivity, the lower the costs of producing goods and services.
This helps lower prices.
+ New technology adds to the quality of the services provided, but not to the
worker’s output.
+ A new form of measurement needs to be created to account for the quality as well
as the quantity of output.
- The Business Cycle
+ Business Cycles -- Periodic rises and falls that occur in economies over time.
+ Four Phases of Long-Term Business Cycles:
1. An economic boom
2. Recession
3. A depression
4. A recovery