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What is a Mixed Economy? - Definition, Characteristics & Examples

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  • 0:00 What Is a Mixed Economy?
  • 1:16 Characteristics
  • 1:39 Examples
  • 3:13 Lesson Summary
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Lesson Transcript
Instructor
Rana Abourizk

Rana has a Masters Degree in Business Administration and is pursuing a Doctorial Degree. She has been teaching online for over a year. She has a strong business background.

Expert Contributor
Joseph Shinn

Joe has a PhD in Economics from Temple University and has been teaching college-level courses for 10 years.

Every country follows some kind of economic system. In this lesson, you will learn about a mixed economy. We will look at the characteristics of a mixed economy and explore a few examples.

What is a Mixed Economy?

Yesterday in class, Sam was really struggling with his homework. He decided to ask his classmate Sara about America's economic system as he was really unsure about what type of system we have.

Sara explained, 'Sam, the United States is a country with a mixed economy.'

Sam&Sara

Sara continued on:

'Two other economic system examples are market economies and planned economies. In a market economy, the consumer plays a larger role than the national and state government. The economy is run by the consumers' purchasing choices. In a planned economy (also called a command economy), the government controls all of the decisions for owning, making, issuing, and exchanging goods.'

He replied, 'Okay, that makes sense, but what about the mixed economy? Sara, can you tell me the features of that type, and maybe give some examples?'

'A mixed economy consists of both private companies and government/state-owned entities. Both have control of owning, making, selling, and exchanging goods in the country. We learned what planned and market economies are; let's just think of a mixed economy as containing features of both planned and market economies.'

Characteristics

'One main characteristic of a mixed economy is the ownership of goods by both private and government/state-owned entities. Monopolies have the potential to occur in this type of economy, but the government closely monitors this. For the economy to be mixed, the government can control some parts but not all. For example, the government may control health care and/or welfare in some mixed economy countries.'

Examples

'Let's look at some examples of mixed economies in more detail.'

Example 1: United States

'The U.S. consists of both private and government/state-owned entities. Sometimes, the government gets involved to help the economy. Two examples of government assistance in the U.S. are welfare and unemployment benefits. These provide financial assistance for people who are in need. There are many types of welfare programs including:

  • Housing aid
  • Aid for children
  • Healthcare
  • Food stamps (which are tickets and/or funds designated to buy food for people with low income)

The government also gets involved with minimum wage policies. Private and government-owned entities must follow these rules.'

Example 2: France

'France is also considered a mixed economy. The economic system is a mix of both command and market economies. The government has some involvement when it comes to employee benefits and welfare.

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Additional Activities

Additional Questions


  1. What is a market economy? Your answer should include a discussion about the roles of the government and the consumer.
  2. What is a planned economy (also known as a command economy)? Your answer should include a discussion about the roles of the government and the consumer.
  3. What is a mixed economy? How does a mixed economy relate to a market economy and a planned economy? Specifically, what is the role of the government in a mixed economy relative to a market economy and a planned economy?
  4. Of the three types of economies (market, planned, mixed), which is the most common throughout the world?
  5. What are the primary advantages of a mixed economy?
  6. What are the primary disadvantages of a mixed economy?
  7. The United States is a mixed economy. What parts of the United States' economy have the characteristics of a market economy? What parts of the United States' economy have characteristics of a planned economy?
  8. What is an example of a country that currently has a planned economy? Why do you believe that this country has a command economy?
  9. Are there any examples of a country that has a pure market economy? If yes, which country? If not, describe a country that would be very close to having a market economy, even if they don't have a pure market one.

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