Economic System Widy Icha

ECONOMIC SYSTEM
Compiler:
Annisa Balqis Budhiani (20190420183)
Widya Nurul Jannah (20190420308)
INTERNATIONAL PROGRAM OF ACCOUNTING
FACULTY OF ECONOMY AND BUSINESS
MUHAMMADIYAH UNIVERSITY OF YOGYAKARTA
2019
CHAPTER I
1. INTRODUCTION
1.1. GENERAL
Economic System is A system used by a country, both government and

private, to manage all economic activities in society.An economic system must
be based on certain principles in order to achieve the welfare and prosperity of
society in general.Each country has a different economic system, depending on
the situation and conditions in the country. The best economic system in a
country will not necessarily give the same results when applied in another
country.
1.2 PURPOSE
The purpose in discussing this material is to know what is Economic

System
1.3 OBJECTIVES OF THIS WRITE
a. To explain what is Economic System
b. To explain Types of economic system
c. To explain Function Of Economic System
d. To explain Main Of Economic System
e. To explain why is Economic System important?

CHAPTER II
1. WHAT IS ECONOMIC SYSTEM

An economic system, or economic order, is a system of production, resource
allocation and distribution of goods and services within a society or a given geographic area.
It includes the combination of the various institutions, agencies, entities, decision-making
processes and patterns of consumption that comprise the economic structure of a given
community. As such, an economic system is a type of social system. The mode of production
is a related concept. All economic systems have three basic questions to ask: what to produce,
how to produce and in what quantities and who receives the output of production.
The study of economic systems includes how these various agencies and institutions
are linked to one another, how information flows between them and the social relations
within the system (including property rights and the structure of management). The analysis
of economic systems traditionally focused on the dichotomies and comparisons between
market economies and planned economies and on the distinctions between capitalism and
socialism. Subsequently, the categorization of economic systems expanded to include other
topics and models that do not conform to the traditional dichotomy. Today the dominant form
of economic organization at the world level is based on market-oriented mixed economies.
2. TYPES OF ECONOMIC SYSTEM

Traditional Economic
A traditional economic system focuses exclusively on goods and services that are
directly related to its beliefs, customs, and traditions. It relies heavily on individuals and
doesn’t usually show a significant degree of specialization and division of labor. In other
words, traditional economic systems are the most basic and ancient type of economies.
The Characteristics of Traditional Economic Systems:
1. There is no clear division of labor in society.

2. Production results and product distribution systems are formed through custom or
tradition.
3. The type of production is adjusted to the needs of each household.
4. Meeting the needs carried out by means of a barter system or exchange of goods.
5. Community life that is family friendly.
6. Land with nature is the source of life and a source of prosperity.
Market Economy
A market economic system relies on free markets and does not allow any government
involvement in the economy. In this system, the government does not control any resources
or other relevant economic segments. Instead, the entire system is regulated by the people and
the law of supply and demand. Therefore, this system is sometimes also referred to as laissez-
faire capitalism.
The Characteristics of Market Economy system:
1. The freedom of the people to carry out economic activities

2. The existence of individual freedom has its own capital and wealth
3. The government does not interfere in the market.
4. There is free competition in various economic activities.
5. There is a pretty tight competition and high-quality goods have emerged.
6. Capital plays an important role in economic activities. The capital owner will control
the market
7. Those who do not have enough capital will not be able to compete in economic
activity
8. There is freedom in using economic resources.
9. Trade, industry and means of production are controlled by private owners
(individuals).
Command Economy
A command economic system is characterized by a dominant centralized power

(usually the government) that controls a large part of all economic activity. This type of
economy is most commonly found in communist countries. It is sometimes also referred to as
a planned economic system because most production decisions are made by the government
(i.e., planned), and there is no free market at play.
The Characteristics of command Economy system:
1. All economic activities are regulated by the government

2. Economic policy is fully regulated by the government (central planning)
3. All production equipment and resources are owned and controlled by the government
4. The central government is fully responsible for the running of the economy.
5. There is no private sector that carries out economic activities
Mixed Economy
A mixed economic system refers to any mixture of a market and a command

economic system. It is sometimes also referred to as a dual economy. Although there is no
clear-cut definition of a mixed economic system, in most cases the term is used to describe
market economies with strong regulatory oversight and government control in specific areas
(e.g., public goods and services).
The Characteristics of mixed Economy system:

1. The government and the private sector play an active role and cooperate in the economy.
2. The government gives freedom to the private sector to carry out economic activities.
However, the government sets limits and can also intervene.
3. The government makes plans, regulations, and policies related to the economy.
4. Competition occurs in the market within reasonable and clean limits where the government
also carries out supervision
3. FUNCTION OF ECONOMIC SYSTEM

 Production
Production is one of the economic activities in a particular society or country.
Where production activities depend on the needs and habits of calculating the
production and income of a country. In the economic aspect, production activities are
always driven by economic motives and economic principles so that all activities are
not useless, there are targets, goals and expectations, so as to produce charcoal and
optimal services.
 Distribution
The activity of distributing a product, be it a product or service, from
producers to consumers so that the product is widespread.
(a) To bring about a balance between supply and effective demand for goods and services in
an optimal manner as far as possible;
(b) To determine what goods and services are to be produced and in what quantities (food-
grains or defence goods, fertiliser or clothing,
(c) To allocate scarce resources among the industries producing goods and services (i.e.,
allocation of scarce iron ores for automobiles or among washing machines or steel utensils);
(d) To determine the best possible productive methods for the full utilisation of the resources
of the society (e.g., coal to be mined by human labour or by machinery, electricity from
thermal power plant or hydro-electric power plant, labour-intensive or capital-in-tensive
method for farming, etc.); and
(e) To distribute the products of agriculture and industry among mem-bers of the community
(i.e., distribution among the few rich or among many poor).
4. THE MAIN OF ECONOMIC SYSTEM

 Capitalism
Market systemeach individual or business works in its own interest and
maximizes its own profit based on its decisions. A market economy is one where the
allocation of resources and the trading of goods and services are through the
decentralized decisions of many firms and households. The equilibrium between
supply and demand determines prices, which determines economic output, which, in
turn, determines the allocation of resources.
 Sosialism
Socialism is the social and economic doctrine that espouses public over private
ownership and control of property and natural resources. Socialists argue that since
everyone contributes to society in the form of work, therefore everyone should benefit
from it. The degree of ownership or control differs among socialists. Some believe
that the government should own most of the property and natural resources, while
others believe that small businesses should be owned privately. Still others, mainly
the rich, believe that simply taxing the rich more is a form of socialism.
5. WHY IS ECONOMIC SYSTEM IMPORTANT?

First, economic systems are needed for humanity not to revert back to the brutal
pillage-and-plunder of our evolutionary ancestors - the apes. For we know that mankind’s
superior intelligence, made-up of many unique compositions, using a collaborative approach,
can build to strengthen our renewability and as a result can serve to prolong mankind’s
evolutionary sustainability.
Second however, that means our economic systems must subjugate to our best
understanding of how nature works, and none of our current religions of economics even
mention, let alone subjugate, to evolution. A gigantic and costly mistake, one we already see
the grave consequences from.
So, our current rebels without a cause (our current systems) merely perpetuate a more
civilized version of the old pillage-and-plunder we now refer to as a vile-maxim; everything
for me and nothing for others.
In evolutionary terms we have merely progressed from the stealing of food by the
apes to the stealing of the merit-of-money by homo sapiens. Such is the dumb form of
capitalism, in violation of rudimentary evolutionary principles, we promulgate as the best
thing since sliced bread.
We must do better in developing operating-systems for humanity that allow more of

us to expose our unique merit. So mankind can evolve in many directions towards the fringe
of what is humanly possible.
CHAPTER III
CONCLUSION
Based on the above explanation it can be concluded that all economic systems are
good and the economic system also has its own advantages and disadvantages. An economic
system is a system used by a country to allocate its resources to both individuals and
organizations in that country. Indonesia is optimistic that Indonesia's economic growth will
increase with increasing national income and growth we can see our development and
progress in other countries with national income per year Indonesia is able to provide
progress.
SUGGESTION
I hope Indonesia can be more advanced and developing, especially in the economic
sector which is getting better with the support of an honest and clean government.

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ECONOMIC SYSTEM

Annisa Balqis Budhiani (20190420183)

Widya Nurul Jannah (20190420308)

INTERNATIONAL PROGRAM OF ACCOUNTING

FACULTY OF ECONOMY AND BUSINESS

MUHAMMADIYAH UNIVERSITY OF YOGYAKARTA

Economic System is A system used by a country, both government and

The purpose in discussing this material is to know what is Economic

1.3 OBJECTIVES OF THIS WRITE

a. To explain what is Economic System

b. To explain Types of economic system

c. To explain Function Of Economic System

d. To explain Main Of Economic System

e. To explain why is Economic System important?

1. WHAT IS ECONOMIC SYSTEM

2. TYPES OF ECONOMIC SYSTEM

The Characteristics of Traditional Economic Systems:

1. There is no clear division of labor in society.

The Characteristics of Market Economy system:

1. The freedom of the people to carry out economic activities

A command economic system is characterized by a dominant centralized power

The Characteristics of command Economy system:

1. All economic activities are regulated by the government

A mixed economic system refers to any mixture of a market and a command

The Characteristics of mixed Economy system:

3. FUNCTION OF ECONOMIC SYSTEM

4. THE MAIN OF ECONOMIC SYSTEM

5. WHY IS ECONOMIC SYSTEM IMPORTANT?

We must do better in developing operating-systems for humanity that allow more of

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