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Illustrate the main characteristics of Capitalist Economy?

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Capitalist Economy: It involves ownership of economic activities, private interest, profit motive. There is no interference of government in economic activities. It is called market economy and open economy. It originated in between 1760-1820. It is not present in its pure form in any country of the world. 

Example: U.S.A, Japan. Germany, England, Italy, France etc. have Capitalist Economy.

Main characteristics of capitalist economy are: 

1. Private ownership on property: In this economy factors of production like land, capital, mines, industries, machines etc. are owned by the private owner. They are free to use them. They have sole right to increase, decrease, keep and use property. 

2. Freedom of choice to consumers: Consumer have sovereignty over economic activities or other words production of goods is done according to purchasing power of the consumers or price mechanism depends upon consumers choice as consumer has top most place in this economic system hence is called the king of the market.

3. Economic freedom to entrepreneur: What to produce? How to produce? In what quantity to be produced is decided by individual. There is no interference of govt, in the policy related to production.

4. Competition: It improves business, skills as there is the competition among salers and purchasers for selling and purchasing of products to satisfy their needs. Advertisement, gift giving, discount, etc. are some ways adopted to create competition.

5. Self interest and profit motive: Every activity in such system is profit based. Consumption is also done or based on self interest.

6. Class struggle: It divides the society into two classes one is rich in sources and called-capitalist and other class is source less and called labourers or workers. Profit earning by workers and exploitation gives birth to class struggle. It raises the gap between the rich and poor.

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