- A mixed economy is divided into four sectors.
Private Sector
- Includes enterprises owned by private individuals or groups.
- Their basic function is production of goods and services.
Government Sector
- Includes public administration, police, and defense.
- It frames and enforces laws.
- It imposes taxes and spends on infrastructure, healthcare, education.
- It also undertakes production through Public Sector Undertakings (PSUs).
Household Sector
- Consists of people who normally live together.
- They take food from a common kitchen.
- These people work in firms and earn wages.
- They work in government departments and earn salaries.
- They are owners of firms and earn profits.
- All human beings (population) belong to this sector.
External Sector
- Consists of exports and imports of goods and services.
- It includes financial flows into and out of the country.