Economy: Types

There are primarily three types of economy:

1. Capitalist economy

2. Socialist economy

3. Mixed economy

Let us see about these economic classifications one by one,

1. Capitalist economy: In a capitalist economy, means of production are owned and managed by private individuals. The main motive of producers is to maximise profit in a capitalist economy. For e.g. USA.

2. Socialist economy: In a socialist economy, society as a whole collectively owns the factors of production. So the means of production are owned and managed by the government. Its main aim is to maximise social welfare. For e.g. China.

3. Mixed economy: It is a co-existence of both, public and private sector. In this case, means of production are owned and managed by the government as well as private individuals. For e.g. India.