During an economic recession, The United Provinces of Utopia government provided loans and took ownership positions the country’s primary financial institution, Bank Co. What economic system does this exemplify?Multiple Choicemodified capitalismpure capitalismlaissez-faire capitalismcommunism
Question
During an economic recession, The United Provinces of Utopia government provided loans and took ownership positions the country’s primary financial institution, Bank Co. What economic system does this exemplify?Multiple Choicemodified capitalismpure capitalismlaissez-faire capitalismcommunism
Solution
The economic system exemplified in this scenario is "modified capitalism". In a pure or laissez-faire capitalist system, the government would not intervene in the economy. In communism, the government would own all businesses and property. In modified capitalism, the government intervenes in the economy to correct market failures and promote social welfare, which is what's happening when the government of Utopia provides loans and takes ownership positions in Bank Co.
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