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Understanding a Mixed Economy: Government Intervention & Financial Sector Role

Explore South Africa's market-oriented mixed economy system, government intervention through nationalization and privatization, and the pivotal role of the financial sector encompassing commercial banks and the Reserve Bank. Delve into the balance between government control and market mechanisms in economic activities.

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Understanding a Mixed Economy: Government Intervention & Financial Sector Role

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  1. A MIXED ECONOMY Pg 98 • 1. S.A. HAS A MARKET ORIENTED MIXED ECONOMY. • 2. Most economies are a mixed economy i.e. government [command] and market mechanism play a major part. Tradition plays a secondary [small] role. • 3.N.B. Another name for the largely command system is Communism. • The S.African system- largely market oriented is called Capitalistic system.

  2. GOVERNMENT INTERVENTION • Nationalization is where the government owns most of the assets.{Public sector} • Privatization is where the people own most of the assets.{ Private sector} • Some services cannot be provided by private people e.g. defence, Law and order; education for the majority of the people.

  3. Government intervention • “what the government gives it must first take away.” Coleman To provide goods e.g. houses and services the govt. collects tax. [ V.A.T; P.A.Y.E; SITE tax; Customs and excise duty etc] There is a big debate about how much government intervention is correct.

  4. PLACE OF GOVERNMENT IN A MIXED ECONOMY

  5. THE FINANCIAL SECTOR • This refers to the banks • Commercial banks e.g.Standard, FNB, Nedbank, Ithala etc. • The S.A. Reserve Bank- regulates money supply- lends money to the commercial bank at the repo rate. • Commercial banks then lend the same money to you and entrepreneurs at a higher rate.

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