What is the economy?
The economy is a system which defines how a country is doing financially through production and consumption of goods and services and they supply of money. The three different types of economy are: market, planned and mixed. The economy consists of consumers, producers and the government.
Planned economy
A planned economy is when the government makes all the decisions for society. Producers working towards the economy are instructed on what to make. A benefit to this type of economy is that most workers are employed and most people enjoy a similar basic lifestyle. A disadvantage is that wages are controlled by the government; therefore motivation levels are not high.
Market economy
A market economy is when the government does not have much control and that they can do little to affect the economy. What they can do is provide legislations to protect customers and companies and making sure no business or organisation restricts competition. Furthermore, they provide needed services such as police and defence and they even ensure the country’s money supply is stable. An advantage of this is that businesses are motivated by profits to make products that customers will buy. A disadvantage is that if there is a major crisis affecting the economy without government intervention the economy would fail.
Mixed economy
A mixed economy is planned and market economy combined. In a mixed economy the government contributes and controls some resources and the market controls the rest. An advantage of this economy is that it ensures the maximum standard of living. A disadvantage is that it leans more toward government control.

Economic factors
This section of the handbook will be explaining the different economic factors that could affect a business positively or negatively. The following economic factors that will be briefly described are: interest