Da VIP Academy / GED / Social Studies / Economics
Economic Systems & Government Role
Compare market, command, and mixed economies and describe government's role.
How it works
Who decides
In a market economy, buyers and sellers decide through prices. In a command economy, the government decides. The U.S. is a mixed economy: mostly market, with regulation, taxes, and public programs.
Why government steps in
To provide public goods (roads, schools), protect consumers and workers, correct monopolies, and stabilize the economy through taxing and spending.
Worked examples
Classify a city building a public bus system.
- Transit is largely a public good.
- Government provides it.
- This is the public sector inside a mixed economy.
Words to know
- Mixed economy
- An economy combining private markets with government activity.
Test-day tips
- • 'Mixed economy' is the correct label for the U.S. on nearly every version of this question.