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Indian Economy is Sixth largest in the world and it is  measured by nominal GDP and follows the system of Mixed Economy.

3 types of economy

1) Capitalist Economy
2) Socialist Economy or State Economy
3) Mixed Economy
 
 

Capitalist Economy

The Capitalist form of economy originated by the Adam Smith famous book
 “Wealth of Nations (1776)
Major Economy Decision such as 
  • What to Produce
  • How much to Produce and
  • At What price to sell

Are determined by Private Enterprises Whereas State (i.e, government) has no role to play 

 
CAPITALISM ‘ is also called as Private Enterprise System , Free Enterprise System , Market Economy

Socialist Economy

Socialist economy proposed by German Philosopher Karl Marx
Major Economy Decision such as 
  • What to Produce
  • How much to Produce and
  • At What price to sell

Are determined by state alone whereas private players has little or no role to play (i.e, the production , supply and prices were all suggested by state only)

 
Socialist economy‘ is also known as Centralised Economy , Centrally Planned Economy, Non-Market Economy

 

Mixed Economy

Mixed Economy is the mixture and blend of both Capitalist and Socialist Economy
Major Economy Decision such as 
  • What to Produce
  • How much to Produce and
  • At What price to sell

Under this System there is freedom of economic activities as Capitalist Economy and State interferences for the social welfare as Socialist Economy . Thus it is the blend of both Capitalist and Socialist Economy

 

Every Economy has some Merits and Demerits Lets discuss some of the points

 
 Capitalist Economy based on Market forces ie, Supply and Demand . It is solely based on Self-interest ( anyone can start business with less intervention by government .) Here People have many choices due to the competitive market with many startups and business .This System accelerates Economic Growth rapidly but it ignores Social interest ie, as market is determined by supply and demand they can keep prices high which avoids the concept of Equality .
 
Socialist Economy is contradict of Capitalist Economy because private players has little or no role to play . It promotes Social Equality and Collective interest .
As most of the economy decisions were made by Government . So, People left with less choices . 
Lack of Self-interest so Startups will be less. 
 
Mixed Economy is the right blend of both Capitalist and Socialist Economy . Here people have freedom of Economic activities with interference of government in the social welfare activities.
 




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