What is a simple definition of capitalism?
Capitalism is an economic system in which private individuals or businesses own capital goods. The production of goods and services is based on supply and demand in the general market—known as a market economy—rather than through central planning—known as a planned economy or command economy.
What is capitalism in your own words?
Capitalism is an economic system in which private individuals own and control most of the factors of production—the resources used to produce goods and services. Individuals also own and run most companies, which compete with other companies for business. The word capital refers to one of the factors of production.
What is the kid definition of capitalism?
Capitalism is. an economic system. That is, it is a system for dealing with money and wealth. In a capitalist country, citizens, not governments, own and run companies. These companies compete with other companies for business.
How do you explain communism to a 10 year old?
Communism is a type of government as well as an economic system (a way of creating and sharing wealth). In a Communist system, individual people do not own land, factories, or machinery. Instead, the government or the whole community owns these things. Everyone is supposed to share the wealth that they create.
What is capitalism and socialism for kids?
Capitalist economies use a free market that is not controlled by the government to let private businesses and people determine the value of products. Socialist countries use a planned economy in which the government controls the production and distribution of necessary goods and services.
What does free market mean for kids?
Kids Encyclopedia Facts. A free market is a system in which the prices for goods and services are determined by the open market and consumers, in which the laws and forces of supply and demand are free from any intervention by a government, price-setting monopoly, or other authority.
Why the free market is good?
Free Market Economy It contributes to economic growth and transparency. It ensures competitive markets. Supply and demand create competition, which helps ensure that the best goods or services are provided to consumers at a lower price.
What is meant by the free market?
The free market is an economic system based on supply and demand with little or no government control. Based on its political and legal rules, a country’s free market economy may range between very large or entirely black market.
Is the US a free market economy?
The United States is considered the world’s premier free-market economy. Its economic output is greater than any other country that has a free market. 1 The U.S. free market depends on capitalism to thrive. The law of demand and supply sets prices and distributes goods and services.
Why is the US not a free market economy?
The Federal Trade Commission was created in 1914 to regulate competition among American companies. Essentially, each act limited markets by granting the federal government the power to regulate business. As a result, the United States no longer has a free market system.