Explore topic-wise InterviewSolutions in .

• Less investment. 
• Absence of private ownership of wealth 
• Limited choice of products.

Mixed economy is the economy that has certain features of both the capitalist economy and socialist economy. India has adopted mixed economy. Let us analyse some of the features of a mixed economy.

• Existence of both private and public sectors. 
• Economy works on the principle of planning 
• Importance to welfare activities 
• Existence of both freedom of private ownership of wealth and economic control.

Price Mechanism

• Relaxation of control in setting up industries. 
• Reduction of import tariff and tax. 
• Changes in foreign exchange rules. 
• Abolition of market control 
• Permission of foreign investment in many sectors. 
• Reduced the role of government in the basic industries and basic infrastructure development.

Socialist economy is an economic system in which the means of production are owned by the public sector. This economic system works on centralised planning. 

Let us analyse other features of a socialist economy:

• Activities aimed at social welfare 
• Absence of private entrepreneur 
• Absence of private ownership of wealth and transfer of wealth to legal heir 
• Economic equality

Correct answer is: b) Liberalisation

Capitalist economy:

1. USA 

6 U.K. 

Socialist economy:

2. China 

3. Cuba 

Mixed Economy:

4. India 

5. Sri lanka

Globalisation is the economic integration and interdependence of nations as a result of free flow of capital, labour, goods and services, and exchange of technology irrespective of boundaries.

Towards the end of the twentieth century, developments in computer, mobile phones, internet, etc. helped in improved communication. Container ships, flights, bullet trains, etc. contributed to the fast means of transportation these changes helped globalization.

India adopted new economic policy in 1991.

Pure form of capitalist or socialist economies can not be seen anywhere today. There is government intervention in capitalist economies like those in the United Kingdom and the United States of America. Private ownership of wealth and freedom of market have been permitted in socialist countries like China and Cuba.

In capital economy there is very little government intervention in the economic activities in capitalist economy. The main functions of the nation are to maintain law and order and to defend the country from foreign invasion. Such nations are known as police state.

• Capital economy 
• Socialist economy 
• Mixed economy

• Relaxation of control in setting up industries. 
• Reduction of import tariff and tax 
• Changes in foreign exchange rules 
• Abolition of market control 
• Permission of foreign investment in many sectors. 
• Reduced the role of government in the basic industries and basic infrastructure development.

Capital economy functions aiming profit, complete each other and there is no control over prices. So capital economy is also called market economy.

It is through planning that the basic problems of an economy are solved by the socialist economy. Regarding what to produce, how to produce and for whom to produce is done to ensure social welfare. Goods and services are produced and distributed accordingly. The amount of goods and services required for the society is calculated and production is done accordingly.

Globalisation have its own merits and demerits. As part of globalisation a wide variety of products, ability to use the most advanced technology, increased competition in the market, more employment opportunities and increase in national income are possible and at the same time increase economic disparity, excess exploitation of natural resources, fall in the price of domestic products lose of government control over economic system happens. Even though globalisation is good for developed nations but it has adverse effect for developing nations.

Multinational companies are those companies registered in the home country but operating in many countries. These companies with high technology and huge capital viewed neoliberalisation as an opportunity. Instead of producing goods in a country and exporting it to other countries, the multinational companies have invested their capital in developing countries so that raw materials, labour and market available there can be used in their favour.

WTO was formed on 1^st January 1995.

IMF and World Bank