The economic system of the United States called a mixed economy. It is a combination of a market or capitalist economy and a planned economy. On the one hand, there is a free exchange of goods and services in a private market. On the other hand, some economic spheres are controlled by a government entity.
Explanation:
The US has freedom of enterprise, allowing people to choose and conduct any legal businesses with limited government involvement.
From the perspective of a free market economy, in the US, competition, demand, and supply influence the decisions of consumers and producers, who are the ones that answer the economic questions for society. There are three main principles of the system: 1) right of choice; 2) right to produce what a producer like; 3) right to turn a max profit.
Consumers are the ones who decide when and where they will buy goods and services. When they go and purchase things, it tells the economy what they want, and then businesses react. In most cases, companies are free to decide how much they are going to make a product, and when and where they want to produce it. One of the main advantages of it is that there is a high degree of consumer satisfaction. People get what they want to buy, and there is a lot of individual freedom for consumers and firms.
US capitalism allows its citizens to own their property or material, such as natural resources, lands, and ideas. Also, there is an open opportunity in the country, meaning that anyone can take part or not take part in the economy – freedom of choice. It encourages people to do their businesses to be productive. Another essential characteristic of the US economy is that there is legal equality meaning that everyone is protected by the same economic rights, the right to succeed, and fail.
However, the US government is an active participant in the economy in order to achieve social goals. The authorities have the power to control some goods and services, such as education, courts, and roads, and to provide subsidies to oil firms and agricultural companies. Moreover, private companies must have licenses approved by the government.