Th1.1: Mixed Economies

Question 1

What is a mixed economy?

Answer 1

where both the free market mechanism and the government planning process allocate a significant amount of the total resources in the country

Question 2

What is the government’s first role in a mixed economy?

Answer 2

creating a framework of rules

• prevent abuse of monopolies
• protect consumers
• protect property rights
• ensure safety standards protecting employers and employees

Question 3

What is the government’s second role in a mixed economy?

Answer 3

supplements and modifies the price system

• produce pubic and merit goods
• ensures consideration of externalities

Question 4

What is the government’s third role in a mixed economy?

Answer 4

redistributes income

• use tax
• move money from rich to poor
• access to NHS e.t.c

Question 5

What is the government’s fourth role in a mixed economy?

Answer 5

stabilises the economy

• manage level of demand
• do through fiscal and monetary policy