Mixed Economies

1.000

We have seen that three is some use of the market mechanism in planned economies. Likewise there is some measure of state control in free market economies. Here the term mixed economy is used; it describes most of the economies in the noncommunist world. These countries are basically market economies, but all contain elements of state enterprise and governments in all of them intervene to modify the operation of market economies.

In these mixed economies private property is an important institution. Supporters of the mixed system hold the view that private property provides an important incentive for people to work, save and invest. They oppose the abolition of private property and argue that it is possible to present great inequalities of wealth from arising by the appropriate government measures (e.g. heavy taxation of income and wealth).

The mixed economy has come into being as a result of increasing government intervention and control in capitalist countries. This development has been particularly extensive during the 20^th century. There are many reasons for this increasing ability of governments.

ADDITIONAL MATERIAL

1 семестр

COMPANY FINANCE

A company’s share capital is often referred to as equity capital. Part of the company’s profit is paid to shareholders as a dividend according to the number of shares they own. If shareholders sell their shares they get more or less than they face value. It depends on the fact if the company is doing well or badly.

If the company needs to raise more capital for expansion it might issue new shares and often it give existing shareholders the right to buy these new shares at a low price. This is called rights issue.

If the company wants to turn some of its profits into capital or capitalize some of its profit it can issue new shares at no cost to the existing shareholders. This issue is called bonus or capitalization issue. Companies often issue such shares instead of paying dividends to the shareholders.

A business must be supplied with finance at the moment it requires it. If there is a regular inflow of receipts from sales a regular outflow of payments for the expenses of operation there are no serious problems. But in many cases a considerable time must elapse between expenditure and the receipt of income. It is the purpose if financial institutions to assist in the financing of business during this interval. Business companies turn to the capital market and the commercial banks to assist them.