Mixed Economy: Key Concepts, Roles, and Global Examples

laissez faire

the doctrine that government generally should not intervene in the marketplace

private property

property that is owned by individuals or companies, not by the government or people as a whole

mixed economy

a market-based economic system in which the government is involved to some extent

economic transition

a period of change in which a nation moves from one economic system to another

privatization

the process of selling businesses or services operated by the government to individual investors, and then allowing them to compete in the marketplace

free enterprise system

an economic system in which investments in firms are made in a free market by private decision rather than by state control

characteristics of a mixed economy

A mixed economy is characterized by a market-based economy with some government intervention

government intervention in mixed economies

Government helps societies meet needs that would be too difficult for them to meet under a totally free market economy

fair marketplace

Government ensures that exchanges in the marketplace are fair

American government intervention

The American government intervenes in the economy by keeping order, providing vital services, and promoting general welfare

protection of private property

Federal and state laws protect private property

limited government regulation

The marketplace operates with a limited degree of government regulation

Adam Smith's view on government

Even free market thinkers like Adam Smith recognized the need for a limited degree of government involvement in the economic marketplace

government involvement in mixed economies

In a mixed economy, the market is free but has a certain degree of government control

Government Intervention

Actions taken by the government to influence the economy, including enforcing laws and providing services.

Economic Stability

A state where the economy experiences constant growth and low inflation, maintained by government regulations.

Infrastructure

The physical structures and facilities needed for the operation of a society, such as roads, bridges, and public transportation.

Public Safety

Services provided by the government to protect citizens, including police, firefighters, and military.

Social Services

Programs designed to support individuals and families, including education and healthcare.

General Welfare

The overall well-being of citizens, which the government aims to promote through various regulations and services.

Social Safety Nets

Government programs that provide financial support to individuals in need, such as Social Security and food assistance.

Economic Questions

The three fundamental questions of economics: What to produce? How to produce? Who has access?

Free Market

An economic system where prices and products are determined by unrestricted competition between privately owned businesses.

Continuum of Mixed Economies

A spectrum that illustrates the varying degrees of government intervention in different economies.

North Korea's Economy

An economy almost entirely controlled by the government, with limited foreign trade and ownership of all property.

China's Economic Transition

The shift towards privatization of state-owned firms since the 1970s, allowing individual investors to compete in the marketplace.

Hong Kong's Market

One of the world's freest markets, characterized by low taxation, limited government intervention, and no tariffs on foreign trade.

Economic Goals

The five objectives of an economy: Freedom, Growth, Security, Equity, and Efficiency.

Purchasing Power

The ability of consumers to buy goods and services, which influences access to products in an economy.

Consumer Demand

The desire of consumers to purchase goods and services, which largely determines what to produce.

Producers/Businesses

Entities that create goods and services, influencing how products are produced in an economy.

Government Preferences

The priorities set by the government that can influence access to goods and services in the economy.

Coal and Fish Exports

The main exports of North Korea, highlighting its limited trade activities.

Electronic Goods and Textiles

The primary exports of Hong Kong, reflecting its strong market presence.