According to the Houston Chronicle, advantages of a free market economy include freedom of innovation and the ability of customers to drive choices in addition to disadvantages such as the danger of the profit margin and market failures. Other advantages include a quick response to consumers' demands, a wide variety of services and goods, and efficient use of resources. However, disadvantages also include unemployment, ignored social costs, and unavailability of some goods and services.
The Chronicle explains that business owners innovate new ideas, develop new products and offer new services in a free market economy. This innovation comes with little to no government interference in telling entrepreneurs what new products the public wants. The Chronicle also explains that consumers ultimately decide which products fail when they choose what to buy. However, the goal of creating a profit margin makes the free market economy dangerous ethically because sometimes business owners rank the pursuit of profit over the well-being of their employees and their customers.
The Chronicle further states that the free market economy has other potential harms if it is unchecked. For instance, far-reaching incidents such as the Great Depression of the 1930s and the real estate market crash of the early 2000s leave many people unemployed, homeless and without an income.Learn More
The labor force participation rate is calculated by adding the number of the noninstitutionalized and nonactive military duty population between the ages of 16 and 64 who are employed or who are looking for work. The United States Department of Labor's Bureau of Labor Statistics (BLS) bases the labor force participation rate on Census Bureau population projections.Full Answer >
The four types of economic resources are labor, land, capital and entrepreneurship. These resources are also called the factors of production.Full Answer >
A diversified economy is an economy that has a number of different revenue streams and provides nations with the ability for sustainable growth because there is not a reliance on one particular type of revenue. This diversification provides nations with the security and reliability that they need so that if one economic revenue stream should fail, the nation knows that they have several other options for revenue.Full Answer >
GDP stands for gross domestic product, which is the market value of finished goods and services manufactured in a country within a set time frame, typically one year. This includes consumer spending, government spending, industry investments and a country’s exports minus its imports.Full Answer >