Each country has its own economy, which refers to the consumption and distribution of resources. However, all economies are not created equal.
There are four major types of economies: pure market, pure command, mixed, and traditional. Each of the four economy types have distinct differences, but some aspects are shared between them.
Pure market economies focus on the relationships between businesses and consumers. In this economy, the government has no say in the production, distribution, and consumption of resources. Freedom and choice are heavily emphasized in pure market economies and businesses compete against each other for customers.
Pure command economies are the opposite of pure market economies. In this economy, the government has complete authority over the production, distribution, and consumption of resources. Freedom and choice are non-existent in pure command economies as the government makes decisions for everyone.
Mixed economies are just as the name suggests — a combination of pure market and pure command economies. In this economy, the government along with businesses and consumers have a say in the production, distribution, and consumption of resources. For example, in mixed economies, businesses may sell products and services to consumers and be required to pay taxes to the government. Almost 100% of economies in the world are mixed, as it is nearly impossible to be firmly market or command.
Traditional economies are centered around tradition and family. In this economy, tradition determines the means of production, distribution, and consumption of resources. Most small tribes and remote villages have traditional economies and focus primarily on agriculture.
The United States, a mixed economy, had a Gross Domestic Product of $21.4 trillion in 2019, the largest in the world. Any time you buy or sell something, you contribute to the growth of the economy!