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The economy in which the government allows freedom of action of all economic units is essentially—
  • a)
    a socialist economy
  • b)
    a mixed economy
  • c)
    a capitalistic
  • d)
    none of the these
Correct answer is option 'C'. Can you explain this answer?
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The economy in which the government allows freedom of action of all ec...
Capitalism refers to an economic system in which a society's means of production are held by private individuals or organizations,not the government
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The economy in which the government allows freedom of action of all ec...
A free market economy. In a free market economy, prices are determined by supply and demand, and there is little government intervention in the market. Individuals and businesses are free to make their own decisions about what to produce, how much to produce, and at what price to sell their goods and services. The government's role is limited to enforcing property rights, regulating competition, and providing basic public goods and services. This type of economy is often associated with capitalism and is often contrasted with command economies, where the government controls all economic activities.
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Features of a Mixed Economy:A mixed economy is an economic system that combines elements of both a market economy and a planned economy. It incorporates features of both private enterprise and government intervention. The correct answer is D, as all of the following features are characteristic of a mixed economy:1. Planned economy:A mixed economy includes elements of a planned economy, where the government plays a role in guiding and regulating economic activities. It formulates economic plans and policies to ensure the efficient allocation of resources and to promote economic stability.2. Dual system of pricing:In a mixed economy, there exists a dual system of pricing, which means that both market prices and government-set prices coexist. While market forces determine prices for most goods and services, the government may intervene to regulate prices in certain sectors to protect consumers or promote social welfare.3. Balanced regional development:Another characteristic of a mixed economy is the emphasis on balanced regional development. The government intervenes to ensure that economic growth and development are not concentrated in specific regions or industries but are spread across different regions and sectors. This helps to reduce regional disparities and promote overall economic stability and social welfare.Benefits of a Mixed Economy:A mixed economy offers several benefits due to its combination of market forces and government intervention. Some of these benefits include:1. Economic efficiency:By incorporating market mechanisms, a mixed economy allows for resource allocation based on supply and demand, which promotes economic efficiency. Market forces encourage competition, innovation, and productivity, leading to higher levels of economic growth.2. Social welfare:Government intervention in a mixed economy enables the provision of public goods and services that may not be adequately provided by the market alone. This includes areas such as healthcare, education, infrastructure, and social security, ensuring a certain level of social welfare and equity.3. Stability and regulation:The government's role in a mixed economy helps to maintain economic stability through macroeconomic policies such as fiscal and monetary measures. It also regulates certain sectors to prevent market failures, protect consumer rights, and ensure fair competition.Conclusion:A mixed economy combines the advantages of both market forces and government intervention. It allows for economic efficiency, social welfare, and stability. The features of a mixed economy include elements of a planned economy, a dual system of pricing, and balanced regional development. These features work together to create a system that promotes both economic growth and social welfare.

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The economy in which the government allows freedom of action of all economic units is essentially—a)a socialist economyb)a mixed economyc)a capitalisticd)none of the theseCorrect answer is option 'C'. Can you explain this answer?
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