IAI Actuarial Core Principles · Business Economics · Relationship between economics and business
Which statement best describes a mixed economy such as India's since the 1991 reforms?
A mixed economy has both private enterprise and substantial government involvement in allocating resources. India after 1991 liberalised markets but kept a strong state role through regulation, public sector firms and welfare provision.
- APrivate enterprise and government both play significant roles in allocating resourcesCorrect
- BAll production is owned and directed by the state
- CResources are allocated only through barter
- DThe government has no role beyond defence and law
- There is no private ownership of capital
Explanation
A mixed economy combines market-based private activity with government provision, regulation and public-sector enterprises. India liberalised in 1991 but retains a significant public role, for example in regulation and public sector banks and insurers.
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