Welcome to the Investors Trading Academy talking
glossary of financial terms and events. Our word of the day is “Market Economy
Market economies work on the assumption that market forces, such as supply and demand,
are the best determinants of what is right for a nation’s well-being. These economies
rarely engage in government interventions such as price fixing, license quotas and industry
subsidizations. While most developed nations today could be
classified as having mixed economies, they are often said to have market economies because
they allow market forces to drive most of their activities, typically engaging in government
intervention only to the extent that it is needed to provide stability. Although the
market economy is clearly the system of choice in today’s global marketplace, there is significant
debate regarding the amount of government intervention considered optimal for efficient
economic operations. An economy in which the greater part of production,
distribution, and exchange is controlled by individuals and privately owned corporations
rather than by the government, and in which government interference in the market is minimal.
Although a total market economy is probably only theoretically possible (because it would
exclude taxation and regulation of any kind), capitalist economies approximate it and socialist
economies are antithetical to it. Market economies are also called free economies, free markets,
or free enterprise systems.

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5 thoughts on “What is Market Economy?”

  1. Government is needed only to create the infrastructure to allow markets to operate. Governments provide a basis of laws, such as protection of property rights and enforcement of contracts. Beyond that, let the markets do their jobs. Markets know what people want, not governments. Yea, market economies!! They make the world a better place.

  2. in my opinion this is a very informational video. my teacher told me to watch it and it helped me in so many ways. i believe i can now ace my test. my friend sitting next to me is very hungry. we watched it in geography econmics and buissness. i am about to leave this class for recess i found the video very enriching towards my learning. i now think i might study econmics in senior school. i would like to thank you immensly for this extremly informative video. yours sincerly a great econmics student 😊

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