QAEconomics › Which statement best describes a pure market economy?
Q

Which statement best describes a pure market economy?

A. Producer intervention in economic choices is strictly forbidden.

B. The government determines economic choices and makes most decisions.

C. The decisions made by producers and consumers drive all economic choices.

D. Producers and consumers make some economic choices while the government makes others.

A

Answer: C. The decisions made by producers and consumers drive all economic choices.

A pure market system of economy is controlled by the law of demand and supply; not by a central government. In other words, there is unrestricted exchange of goods and services and room for private ownership of property. Unlike in a pure command economy where the government takes total control of the market as well as other properties, pure market economy has literally no barriers to any form of exchanges in the financial space.

In the world today, there aren’t any pure market economies as the government sometimes intervenes in central planning. What most countries practice is the mixed market system which involves both the government and also self-interest. However, some markets are considered freer than others. Economies like that of Hong Kong, the United States, Switzerland, Singapore and New Zealand are considered to be the five countries with the most economic freedom.

 

9 months ago
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