After Independent India adopted _______ of economics model.
i) Mixed economy ii) Socialist economy iii) Capitalist economy iv) Agriculture economy
Explain with reasons whether the following statements are true or false.
India neither joint socialist nor capitalist group during cold war.
Globalisation is the new open economics model.
Answers
Answer:
Explanation:
A mixed economic system is a system that combines aspects of both capitalism and socialism. A mixed economic system protects private property and allows a level of economic freedom in the use of capital, but also allows for governments to interfere in economic activities in order to achieve social aims. According to neoclassical theory, mixed economies are less efficient than pure free markets, but proponents of government interventions argue that the base conditions required for efficiency in free markets, such as equal information and rational market participants, cannot be achieved in practical application.
KEY TAKEAWAYS
A mixed economy is an economy organized with some free market elements and some socialistic elements, which lies on a continuum somewhere between pure capitalism and pure socialism.
Mixed economies typically maintain private ownership and control of most of the means of production, but often under government regulation.
Mixed economies socialize select industries that are deemed essential or that produce public goods.
All known historical and modern economies are examples of mixed economies, though some economists have critiqued the economic effects of various forms of mixed economy.
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Mixed Economic System
Understanding Mixed Economic Systems
Most modern economies feature a synthesis of two or more economic systems, with economies falling at some point along a continuum. The public sector works alongside the private sector, but may compete for the same limited resources. Mixed economic systems do not block the private sector from profit-seeking, but do regulate business and may nationalize industries that provide a public good. For example, the United States is a mixed economy, as it leaves ownership of the means of production in mostly private hands but incorporates elements such as subsidies for agriculture, regulation on manufacturing, and partial or full public ownership of some industries like letter delivery and national defense. In fact, all known historical and modern economies fall somewhere on the continuum of mixed economies. Both pure socialism and pure free markets represent theoretical constructs only.
What Is the Difference Between a Mixed Economy and Free Markets?
Mixed economic systems are not laissez-faire systems, because the government is involved in planning the use of some resources and can exert control over businesses in the private sector. Governments may seek to redistribute wealth by taxing the private sector, and using funds from taxes to promote social objectives. Trade protection, subsidies, targeted tax credits, fiscal stimulus, and public-private partnerships are common examples of government intervention in mixed economies. These unavoidably generate economic distortions, but are instruments to achieve specific goals that may succeed despite their distortionary effect.