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AMERICAN ECONOMIC ASSOCIATION: An organization of over 25,000 professional economists. Founded in 1885, this premier top-of-the-economic-association-list publishes the prestigious American Economic Review, arguably THE number one scholarly U.S. economic journal and the Journal of Economic Literature, arguably THE number one index of economic journal publications. The AEA, as acronymically inclined economists call it, also sponsors an annual conference where professional economists present scholarly papers on their latest scholarly research.
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                           MIXED ECONOMY: An economy, or economic system, that relies on both markets and governments to allocate resources. Every economy in the real world regardless of their common designation (such as capitalism, socialism, or communism) make use of both markets and governments and is technically a mixed economy. While, in theory, resource allocation could be undertaken exclusively through markets or exclusively through governments, in the real world all economies rely on a mix of both markets and governments for allocation decisions. Markets allocate resources through voluntary choices made by living, breathing people. Governments force allocation through involuntary taxes, laws, restrictions, and regulations. While everyone likely has their own personal favorite when it comes to using of markets or government to do the deed of allocation, both institutions play vital roles in a mixed economy.MarketsThe key term for markets is voluntary. Markets are the voluntary exchange of goods. No one forces a person to buy a hot fudge sundae for breakfast or work as a sales clerk at the jogging shoe boutique. People do a market exchange because they choose to.An economy that uses nothing but markets to allocate resources is called a pure market economy. This is a theoretical ideal that does not actually exist in the real world. But it provides an excellent benchmark for comparison with real world economies. Economists love benchmarks such as this, especially when practicing normative economics. GovernmentsThe key term for government allocation is involuntary. Governments set forth the laws and rules. If people do not follow the rules, then they are punished. Governments can punish those who do not follow the rules because... well... because that is what they do. Given a choice, people probably would rather NOT pay taxes or have their cars safety inspected. They follow government rules because they have to, because it is the law.An economy that uses nothing but government to allocate resources is called a pure command economy. This is also a theoretical extreme that does not actually exist in the real world. But like a pure market economy, it provides a benchmark for comparison with real world economies. A Real World Continuum| Mixed Economies |  |
If pure market economies and pure command economies are theoretical ideals that do not actually exist in the real world, where does that leave real world economies? Somewhere in the middle. Real world economies form a continuum bounded by these two theoretical extremes.However, noting that real world economies are real and not theoretical ideals does not say much. While all real world economies are mixed, some mixed economies tend to use markets more than governments and others rely more on governments than markets. For example, capitalism is the popular term for a market-oriented economy that leans heavily to the market end. Socialism and communism are mixed economies that lean more (often a lot more) toward government control. Goals and PoliciesAn inherent dimension of a mixed economy is the pursuit of economic goals using assorted government policies. The five basic goals that are generally desired by society are: (1) full employment, (2) stability, (3) economic growth, (4) efficiency, and (5) equity. Governments take primary responsibility in the pursuit of these five goals with a wide variety of economic policies that assist, guide, control, and regulate voluntary market exchanges. Such policies take the form of: (1) laws passed by legislatures, (2) administrative actions taken by elected executives, (3) rules set forth by government agencies, and (4) decisions made through the courts.
Recommended Citation:MIXED ECONOMY, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2025. [Accessed: March 17, 2025].
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ORANGE REBELOON
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Today, you are likely to spend a great deal of time looking for a downtown retail store hoping to buy either a New York Yankees baseball cap or several magazines on home repairs. Be on the lookout for cardboard boxes.
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The wealthy industrialist, Andrew Carnegie, was once removed from a London tram because he lacked the money needed for the fare.
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"If football taught me anything about business, it is that you win the game one play at a time." -- Fran Tarkenton, Football Player
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BPEA
Brookings Papers on Economic Activity
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