In a mixed economic system, part of the economy is left to the free market and part of it is run by the government. Most economies are mixed, with varying levels of government intervention.
Mixed economies start with private businesses and then the government intervenes in some areas of the economy, such as through laws and rules, and taxes which are spent on public services.
Most countries have mixed economies, including Australia. In Australia, about 34% of the country’s money is spent by the government.
Picture source: http://imgarcade.com/1/mixed-economy-system/
Why do most countries have mixed economies?
The reason most countries have a mixed economic system is because this system has many advantages. Most business and industry can be left to private firms who need to be efficient to earn profits. If they are wasteful, it costs them money, so they don't want this. Having some government regulation is good for areas where free markets don't work. Governments can prevent extremely high prices. Governments can punish poor behaviour such as pollution. Governments also provide things for the public, like police, national defence, education and health care. A mixed economy can also create equality and protect people from living in poverty, but at the same time reward people for working hard. How successful a mixed economy is will depend on how good the balance between government intervention and private businesses is.
THIS VIDEO EXPLAINS MIXED ECONOMIC SYSTEMS WELL:
http://www.investopedia.com/video/play/mixed-economic-system/
LINKS
http://www.economicshelp.org/blog/glossary/mixed-economy/
http://www.economicshelp.org/blog/3963/economics/list-of-government-spending-as-of-gdp/
Mixed economies start with private businesses and then the government intervenes in some areas of the economy, such as through laws and rules, and taxes which are spent on public services.
Most countries have mixed economies, including Australia. In Australia, about 34% of the country’s money is spent by the government.
Picture source: http://imgarcade.com/1/mixed-economy-system/
Why do most countries have mixed economies?
The reason most countries have a mixed economic system is because this system has many advantages. Most business and industry can be left to private firms who need to be efficient to earn profits. If they are wasteful, it costs them money, so they don't want this. Having some government regulation is good for areas where free markets don't work. Governments can prevent extremely high prices. Governments can punish poor behaviour such as pollution. Governments also provide things for the public, like police, national defence, education and health care. A mixed economy can also create equality and protect people from living in poverty, but at the same time reward people for working hard. How successful a mixed economy is will depend on how good the balance between government intervention and private businesses is.
THIS VIDEO EXPLAINS MIXED ECONOMIC SYSTEMS WELL:
http://www.investopedia.com/video/play/mixed-economic-system/
LINKS
http://www.economicshelp.org/blog/glossary/mixed-economy/
http://www.economicshelp.org/blog/3963/economics/list-of-government-spending-as-of-gdp/