The Role of Markets in Allocating Resources (CIE IGCSE Economics)

Mali is a low income and low productivity country in Africa. Its government is using fiscal policy to reduce poverty. The country’s main industries are agriculture and gold mining. In recent years, however, there have been some changes in its resource allocation. The country is developing its iron ore industry. Globally, the iron ore industry is one which has experienced a significant number of mergers in recent years.

Identify two economic agents in an economy

In a mixed economic system, such as Portugal’s, the government intervenes in the economy. Reasons for government intervention include to correct market failure and to achieve its aims for the economy, such as control of inflation. In 2017, one-fifth of Portugal’s population was living in poverty and the government increased its spending

Identify two of the basic questions which determine the economic system of a country

Singapore is a high-income country with a shortage of land and labour. Singapore is often given  as an example of a market economy. The Singaporean government does, however, intervene  in the economy. For example, it encourages its population to eat two servings of fruit and two servings of vegetables per day

Define market economic system

The use of supply-side policy measures, including deregulation, is moving China closer to a market economic system, where resources are allocated through the price mechanism. Some supply-side policy measures, such as education and subsidies, can also increase a country’s economic growth rate. China joined the World Trade Organisation in 2001 and has since removed some quotas on imports and reduced some import tariffs. These measures may influence the size of its current account surplus

Define price mechanism