The types and role of the Economy

Di Simone Bagnato.

In economic affair there are the types and role of the economy.
Economies differ in the economic resources: land, labour and capital.
To decide how allocate resources and all economies must find the answer to 3 basic question which relate to the production and distribution of goods and services: What should be produced? How should it be produced? For whom should it be produced? Not all countries have the same method of organising their economy.
There are 3 economic system: -the free market system, the mixed economy and the planned system.
The government completely controls production in a planned economy.

SMITH and KEYNES, the two innovators:

Adam Smith (1723-90) was one of the first real economists. He was a Scotsman. In 1776 he wrote a very famous book called Inquiry the Nature and Causes of the Wealth of Nations. This established theories relating to labour, distribution, wages, prices and money. Smith also formulated the theory of the natural freedom of trade and commerce, laissez-faire, which changed the field of economics significantly and also shaped the political theory of the century.

John Maynard Keynes (1883-1946) was an English baron, whose wellknown works The economic Consequences of the Peace (1919), A Treatise on Money (1930) and The General Theory of Employment, Interest and Money (1936) made him one of the most famous economists of the twentieth century. Keynes believed in a planned economy and encouraged government spending in excess of revenue by borrowing to finance the deficit.