"A free-market economy is withdrawn from government, in other words, it’s privately owned and thus companies in a free-market economy make their own decisions. This leads to a close relationship between demand and price; the higher the demand is the higher the production and price will be, same thing if the demand is low. The consumer is entirely in charge of the market. This is only possible though because of restrictions that the government sets on companies ensuring that no one attempts to monopolize a resource. In so doing the government is avoiding what could lead to economic crisis. On the other hand, state-directed economies or, as the book refers to them, Command economies, the government may as well own the market. The government decides what kind, and how much of goods and services the country will produce as well as the price set for the product. In this economy style the idea is that the government does everything for the good of the nation. This is to ensure that every company can succeed rather than one or a few individuals. Most countries with economies like this were a part of communistic governments so after communism died this style of economy has significantly decreased in numbers. The comment about free-market economies stimulates economic growth whereas state-directed economies stifle it would mostly be true, however, I do believe that there are still issues with free-market economies too. A hybrid of the two may prove beneficial, however, according to the book there have been many countries that attempted this and the “mixed” economies have started to steer away from being mixed toward being free-market. There have also been times when the United States government decided to invest enough stake in a company to keep technically own the company. The purpose of this was to keep the company from going under, which helped avoid a possible financial crisis. The plan was to sell the company back to private individuals rather than holding on to it. Doing this did stifle the growth of the company for a time, however, it also kept the company from closing and allowed individuals to recover before resuming control of the company. Used correctly I think that a mixed economy could prove to be a good system but there have been many occurrences in other countries where it failed. I’m unsure of what exactly the correct usage would look like so perhaps it would be best to not lean toward it. "