Investment - Economic Systems

Investment - Economic Systems
The investment business and its participants do not work in a vacuum; they are a part of global economic systems. From pure capitalism with open markets to planned economies with centralised authority, economic systems come in many different shapes and sizes. The effective distribution of limited resources to the most useful uses is one of the main objectives of most economic systems.

To generate goods and services, resources including labour, physical assets, and financial capital are required. Although resources are limited, there is no shortage of desire for goods and services. Consider the idea of scarcity by imagining people on a tight budget; in other words, people with restricted financial resources. 

Should they use their money towards paying off their mortgage, a new car, groceries, or a vacation? Similar to this, should a business concentrate its efforts on a current product or a potential new product with a higher profit margin? And should governments spend money on infrastructure, defence, education, or healthcare?

Resources are limited, thus decisions must be taken on how to distribute them. Three issues that participants in economic systems must deal with are:
Which products and services ought to be created?
How ought the products and services to be made?
Who should receive the created goods and services?
Economic planners encourage using limited resources to generate goods and services in a way that meets consumer demands.