Question

Analyse how the level of government intervention varies according to the type of economic system countries operate

Answer 1

Answer:

In a capitalist economy, the government acts as a regulatory and complementary body. On the other hand, in a socialist economy, the government plays a comprehensive role in almost all economic activities, such as production, distribution, and consumption, of a nation.

Answer 2

Answer:

widely, there are three economic systems on which the market of a nation is operated. these are - capitalist, socialist, and mixed economic systems.

they are explained as follows:

1. capitalist economic system  

• An economy based on the free market mechanism is referred to as a capitalist economy. The laissez-faire system is another name for a capitalist economy.

• Government's influence in a capitalist economy is quite meager
• According to Adam Smith, the main duties of government are to uphold the rule of law, strengthen the national defense, and control the money supply.

2. socialist economic system

• The role of government in a socialist economy is very different from the role it plays in a capitalist economy. here, the government has a significant influence over practically all economic activity.
• In a socialist economy, private property ownership is only permitted to a limited extent, and the idea of a free market is also abandoned. In a socialist economy, public ownership of resources alters private ownership of those resources.
• Furthermore, the government or its central planning authority is wholly responsible for choices on production, resource allocation, employment, price, and consumption.

3. mixed economy

• in a mixed economy private sector is encouraged to operate on the free market system while the public sector is involved in the expansion and development of public utilities, which is based on the socialist economic theory.

• the government oversees the activities of the private sector by enacting various monetary and fiscal policies in addition to striving to build and improve the public sector.

India follows a mixed economic system, with both, public and private ownership in the market.

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