CMA Foundation · Fundamentals of Business Economics and Management · Economic and Business Environment
An economy is described as a mixed economy. Which feature correctly characterises it?
In a mixed economy the private and public sectors coexist and both participate in economic activity. The government regulates and runs some enterprises while private firms operate for profit, which is the Indian model, unlike pure capitalism or complete central planning.
- AAll production decisions are taken only by the government
- BPrivate and public sectors coexist and both take part in economic activityCorrect
- CThere is no government role in regulating markets
- DPrices are fixed entirely by a central planning authority
Explanation
A mixed economy combines features of capitalism and socialism, with private enterprise and public sector units operating together, as in India. Complete state control describes a socialist economy and no state role describes pure capitalism.
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