a) The distinction between free market, mixed and command economies: reference to Adam Smith, Friedrich Hayek and Karl Marx
b) The advantages and disadvantages of a free market economy and a command economy
Free Market Economy
c) The role of the state in a mixed economy
The state allocates the resources for the public sector so that neither the public nor private sector get excess resources or face shortages
• It serves as the allocating personnel of the economy’s resources
The state decides and distributes subsidies to households and sectors that need it and similarly collect taxes from households or sectors
• In order to have a fairer distribution, the state does this
The state acts as a stabilizer; it prepares plans, policies and strategies and ensures that it gets implemented effectively