Which statement best describes a mixed economy?

• A. A command economy
• B. A market economy with no government intervention
• C. An economy with varying levels of government involvement
• D. An economy based on tradition

Answer: (C)

A mixed economy blends private markets with government involvement, and the level of that involvement can vary. The best description is that there are varying levels of government involvement, because some decisions are driven by market forces while others are guided or restrained by policy, regulation, and public services. This flexibility—government acting in different ways and to different extents across sectors—defines a mixed system.

In contrast, a command economy is driven mainly by central planning with little private enterprise; a pure market economy would have little or no government intervention; and a traditional economy bases decisions on customs and history.