Question

In this economy, investors can make millions investing in the construction of
new homes, but it is just as likely that the value of these properties could
decrease by 40% and they will lose millions of dollars. There is no protection on
how much you can lose. What economic system is it?

Answer 1

This Economic System is known as Free market Economy.

Some economies are heavily regulated by governments. The government controls all means of production and wealth distribution in the most rigidly planned, or command economies, setting prices for goods and services as well as worker pay. On the other hand, in a totally free market economy, production and labor are governed by the law of supply and demand rather by a useful planner. Companies offer goods and services at the best cost that customers are willing to pay, and workers are paid the greatest earnings that businesses are prepared to pay for their labor.

• Most economies have features of both free market and command economies.

• In a free market economy, supply and demand, rather than government interference, regulate production and labor.

According to the Heritage Foundation's 2022 Index of Economic Freedom, the most free economy is that of Singapore, which is followed by Switzerland and Ireland. The United States comes in at number 25, while Venezuela and North Korea came in last.

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