Market economy and its types

system where decisions regarding investment, production, and distributionare based on the interplay of supply and demand,which determines the prices of goods and services The major defining characteristic of a market economy is that investment decisions, or the allocation of producer good, are primarily made through capital and financial markets.This is contrasted with a planned economy, where investment and production decisions are embodied in an integrated plan of production established by a state or other organizational body that controls the factors of production.

1. Traditional Economic System

A traditional economic system is the best place to start because it is, quite literally, the most traditional and ancient type of economy in the world. There are certain elements of a traditional economy that those in more advanced economies, such as Mixed, would like to see return to prominence.

2. Command Economic System

In terms of economic advancement, the command economic system is the next step up from a traditional economy. This by no means indicates that it is fairer or an exact improvement; there are many things fundamentally wrong with a command economy.

3. Market Economic System

A market economy is very similar to a free market. The government does not control vital resources, valuable goods or any other major segment of the economy. In this way, organizations run by the people determine how the economy runs, how supply is generated, what demands are necessary, etc.

4. Mixed Economic System

A mixed economic system (also known as a Dual Economy) is just like it sounds (a combination of economic systems), but it primarily refers to a mixture of a market and command economy (for obvious reasons, a traditional economy does not typically mix well). As you can imagine, many variations exist, with some mixed economies being primarily free markets and others being strongly controlled by the government.

The economic cycle and its phases

An economy in full recession has seen its gross domestic product retract over two consecutive quarters. Interest rates fall and consumer expectations bottom out, while the yield curve remains normal. Economic sectors that usually profit most during a recession include cyclical and transport industries near the beginning of the stage, plus technology and industrials near its end.

In the early recovery stage, the economy begins to pick up. Consumer expectations rise and industrial production increases. Interest rates bottom out and the yield curve starts to get steeper, as well. Sectors that are successful in this portion of the cycle include industrials during the beginning, basic materials, and energy near the end.

In the late recovery stage, interest rates rise and the yield curve flattens. Consumer expectations drop and industrial production is flat. Sectors that succeed typically include energy near the beginning, staples and services near the end.

And in the early recession stage, consumer expectations are at their lowest, industrial production falls, interest rates reach their highest and the yield curve flattens or inverts. Sectors that do well in the early recession stage are usually services near the beginning; utilities, cyclicals and transports near the end.

Credit: essence and consumer credit

Credit is a contractual agreement in which a borrower receives something of value now and agrees to repay the lender at some date in the future, generally with interest. Credit also refers to an accounting entry that either decreases assets or increases liabilities and equity on the company's balance sheet. Additionally, on the company's income statement, a debit reduces net income, while a credit increases net income.

incurs when purchasing a good or service. Consumer credit includes purchases obtained with credit cards, lines of credit and some loans. Consumer credit is also known as consumer debt. Consumer credit is divided into two classifications: revolving credit and installment credit. The most common form of consumer credit is a credit card.

 

Credit: essence and mortgage

Credit is a sum of money that has to be returned, be payed according to the agreement. There are forms of the credit such as commercial credit, consumer credit, mortgage (ипотека), international credit, leasing, factoring, and etc

• Consumer credit is a credit that is taken by person to buy long term goods.

• Mortgage is a form credit when person can get money but should give mortgage to the bank (house, land)

• Factoring means the bank covers all debts of the enterprise, then requires the money from the enterprise.

• Commercial credit is form of credit when it is used to let pay enterprise for the goods after buying them. This form is used only between enterprises

 

Market economy and its functions

A market is a set of arrangements by which buyers and sellers are in contact to exchange goods and services.

• The market functions:

• Self regulating function. The prices guide society in choosing what, how and for whom to purchase.

• Stimulating function. Businessmen use an innovation equipments, effective ways of producing goods to get high level of profit on the market.

• Informating function. The market closes unhealthy, non efficiency production, but it gives possibility to run perspective, new business.

The structure of a market is a description of the behavior of buyers and sellers in that market.