In a mixed economy, the government will provide a welfare system to support the unemployed, the infirm and the elderly, in tandem with the market-driven aspects of the economy. Governments will also spend money running key areas such as defence, education, public transport, health and police services.
Governments raise finance for this public expenditure by:
• collecting taxes directly from wage-earners and companies
• collecting indirect taxes (eg, sales tax and taxes on petrol, cigarettes and