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What are functions of an economic system?

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Quick Answer

Basic functions of an economic system are to produce and consume goods and services. The way in which people within the economy do this varies based on the type of economic system.

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Economic systems include traditional, capitalism, fascism, socialism and communism. When asking basic economic questions, such as what to produce and how much, the answers vary based on economic system.

For example, in a traditional economic system, tradition determines how much to produce, while in a capitalism system, the market determines it. Both fascism and socialism rely on the state and market to determine production, while communism simply relies on the state. Capitalism is known as the most adaptable economic system while communism and traditional are the least flexible.

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