What do you call an economy in which the government - ideally - has nothing to say about what, how, and for whom goods are produced; the factors of production are privately owned?

Question

Coleman Lyons

Business

2 October, 17:18

What do you call an economy in which the government - ideally - has nothing to say about what, how, and for whom goods are produced; the factors of production are privately owned?

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Answers (1)

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Yasmine Moses · Answer 1

The correct answer is market economy.

Explanation:

A market economy is a type of economy where most of the resources or factors of production are privately owned. The allocation of resources is determined by the market forces and not the government.

The government is not in control of what, how or for whom the goods are produced. This type of economy is directly in contrast with a centrally planned or controlled economy, where the factors of production are owned by the government and the government decides the allocation of resources.