Mixed Economy
Definition: An economic system that combines elements of a free market and a centrally-planned economy.
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Question: What are the pros and cons to a mixed economy?<br />
Answer: <br /><br />Pros- 1. Lessen the amount of government control and government regulation that is prevalent in command economies. 2. Most industries and businesses can now be left to the private firms. These private firms are more likely to be efficient compared to firms controlled by the government as they have profit incentive for cutting costs and being innovative. 3. The government has the chance of pursuing policies that will provide a macro-economic stability such as an expansionary fiscal policy during times of recession. 4. Help create an improve equality and offer safety net that will prevent the people from suffering absolute poverty. In addition, allow people of enjoying financial rewards of entrepreneurship and hard work. 5. Allow government regulation in the areas with market failure. Cons 1. Socialists are criticizing mixed economy as it allows a lot of market forces that can lead to inefficient allocation and inequality of resources. 2. It can become hard to identify exactly where the government will need to intervene. 3. Free market economists are also criticizing mixed economies as it allows excessive intervention of the government. 4. According to libertarians, most governments are actually very poor economic managers as these are invariably influenced by short term and political factors.

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