Question

Describe the three types of Economies giving relevant examples

Answer 1

Ans.The three types of economies are given as follows:

(a) Free- market economies: These occur usually in democratic countries. The individuals and firms are free to make their own decisions. The government intervention is very less. They are essentially capitalist economies. The exchange between buyers and sellers takes place in competitive market where the price of a good is set according to the market forces of demand and supply. The example for such economies are, Hong Kong, Singapore, Australia, etc.

(b) Command Economy: In this type of economy, everythings is planned by the central government. The government intervention is higher in this type of the economy. The example for such economy is North Korea.

(c) Mixed Economy: It is a combination of free economy and command economy. The firms and individuals are free to take their own decisions in the market but when there is situation of disequilibrium in the market, then government intervene in the market and restore the equilibrium. The example for such an economy is India, USA