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A capitalist economy otherwise called as the free market economy can be defined as an economic activity, where the means of production are privately owned. Most of the economies over the world have enriched their economic system by implementing capitalist norm in the recent years. Here in such form of economy there is no Government interference.
The basic characteristics of such types of economic system are as follows:
- More private participation in the field of economic activities;
- Free environment to compete in the economy;
- Individuals and firms act for profit motive;
- High freedom for choice to the consumers;
- Government acts as a police state.
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