Question

In 2008, the U.S. government took an 80 percent stake in AIG to stop that financial institution from collapsing, the theory being that if AIG did collapse, it would have very serious consequences for the entire financial system. What type of economy is this an example of?

A) Mixed B) Command C) Capitalistic D) Market

Answer 1

Answer:

Mixed economy

Explanation:

Mixed economy uses a mixture of market economy and planned economy. There is free market but government tends to intervene when the market is going to collapse.

In this instance in 2008 the United States government had to intervene and take 80% of AIG stake in order to prevent its collapse.

The government stepped in because of the implications for the whole financial system. This is an example of mixed economy.