Question

Distribution Of Resources In Mixed Econmy

Answer 1

Answer:

Thus mixed economy or mixed economic system refers to an economic system in which both free market and Government have significant roles in the working of the economy. In a mixed economy elements of both free market system and control or regulation by the Government are present. The proportion of free market working and Government regulation varies from country to country.

Many economies of the present-day world are examples of mixed economy. Mixed economy functions through private enterprise as well as Government. The Government interferes with or regulates the private enterprise in various ways. It has now been realised that the free and unfet­tered functioning of the private enterprise gives rise to many evils.

As a result of free working of the private enterprise, there are violent fluctuations in economic activities; sometimes the condi­tions of depression and unemployment are created and sometimes the conditions of boom and inflation emerge. Thus a free-market economy suffers from what are called business cycles, with all their consequent evils. Besides, as a result of free functioning of the private enterprise and price mechanism, extreme inequalities of income and wealth are produced.

The following of ‘Laissez Fairer’ policy by the Government, weaker sections of the society are not protected. On the other hand, the command economic system in which resource allocation and income distribution is decided through centralised planning collapsed due to various deficiencies and failures. Therefore, in both Russia and China free-market economic system along with some govern­ment control has been adopted.

Answer 2

Mixed economies may have a distinct private sector, where resources are allocated primarily by market forces, such as the grocery sector of the UK economy. Mixed economies may also have a distinct public sector, where resources are allocated mainly by government, such as defence, police, and fire services.