How would the government of a market economy handle a recession?

Question

What about a mixed economy? Command economy?

Answer 1

market economy: A system of allocating resources based only on the interaction of market forces, such as supply and demand. A true market economy is free of governmental influence, collusion and other external interference.

Example would be the US. Recession is a normal correction economical phenomena; usually the Fed lower the interest rate, so businesses borrow and invest more, and as a result produce and sell more locally and internationally which in turn leads to Economic Growth.  

command economy: An economy where supply and price are regulated by the government rather than market forces. Government planners decide which goods and services are produced and how they are distributed. The former Soviet Union was an example of a command economy. Also called a centrally planned economy.

A recession in a command economy is blamed totally on the government because it decides how much to produce, when, and to who. Thus, when they produce less, they sell less and export less, which leads to a recession. I would assume they would try to produce and organize better if they want their economy to grow.

A mixed economy is an economic system that incorporates aspects of more than one economic system. This usually means an economy that contains both private-owned and state-owned enterprises[1] or that combines elements of capitalism and socialism, or a mix of market economy and planned economy characteristics.[2]



Mixed economy: a degree of private economic freedom (including privately owned industry) intermingled with centralized economic planning (which may include intervention for environmentalism and social welfare, or state ownership of some of the means of production).

Recession would be approached the same as market economy i.e. lower interest rate and also the government could sell some of its assets to promopt more investment and thus economic growth.

hope that helps!