What are the important features of a capitalist economy?
Capitalist economy is an economic system where the means of
production are privately owned. These means of production are
driven by the motive of profit making. This economic structure is
also known as free market economy or laissez faire.
Following are the features of a capitalist economy:
1. Role of the government
The government provides the basic framework for the smooth
functioning of an economy. It provides the basic framework and is
responsible for maintenance of law and order, justice, growth and
stability, defence, etc.
2. Profit motive
The economic agents are driven by the prime motive of profit
3. Central problems
The central problems of an economy are solved by the market
forces of demand and supply, i.e., the law of demand and supply
operates here. The producers will supply only those goods and
services that are demanded by the economy.
4. Role of private sector
The role of private individuals is more dominant. The main role
of undertaking production and organising factors of production
are played by the private individuals and capitalists.
This economy is also called `laissez
It has minimum interference or restriction from the government.
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