Mixed Economic System Analysis
According to Prof. Loucks (2009) “An economic system consists of those institu¬tions which a given people or nation or group of nations has chosen or accepted as the means through which their resources are utilised for the satisfaction of human wants.”
There exist different types of economic systems; free market economy, centrally planned economy and the mixed economy. These are discussed below:
- In the free market economic system, the government has no or very limited involvement on demand and supply and decision making. In other words, the prices of products or services are determined by the market itself and consumers.
- On the contrary of the free market economic system, in the command economic system, it is the government which is
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Like in every country’s economy, the four organisations will depend on the fiscal and monetary policy as these will greatly influence the activities of the organisations.
Firstly with the monetary policy this consists of changing the interest rate which will impact on the money supply. Secondly with the fiscal policy relates to the amount of tax an organisation need to pay to its government.
In the case that the government decides to increase the tax rate, fish marine Ltd will have to pay more on products produced and car garage will have to pay on the service it provides, which will reduce the amount of money it will have for investment or as monthly revenue. A way to lessen such impact, the two organisations may choose to charge more money to its customers.
On the other hand, if the government decides to reduce the tax rate, organisations will have more money to invest. This may have positive impacts on the society, whereby organisations may decrease their prices, develop other products, create more.
Monetary
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The effect on organisation will be low interest rates which will increase organisation borrowing from banks. This will also make spending more attractive and encourage exporters as their products will become cheaper for other countries.
The competition policy in the UK economy is based on the Competition Act 1998, Office of Fair Trading (OFT) and the Competition Commission (CC) and also other regulatory institution. The aim of competition policy is to boost competition on the market which will make organisations work more efficiently and effectively. (Ben S. Bernanke, 2011)
The impacts of competition policy are listed below:
Lower prices; in a competitive market, products are cheaper. This will encourage organisation to produce more which will boosts the economy.
Better quality: competition policy also encourages organisations to improve their products quality so as to attract more consumers.
More choice: competition policy also encourages organisations to vary their products so as to offer a greater choice to its
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