It refers to the state through administrative orders and other means to control the overall price level. The most common is the state of all commodity prices and prices of labor services to implement control, to take the fixed price model, the pricing power in the hands of the state, the state also controls the total price level. This form of destruction of the market to form the mechanism of price, although can seek a certain period of price level of stability, but in the long run, is not in line with the objective economic laws, will give the future instability buried hidden dangers, stability is only temporary, so it is only the state regulating the overall level of price of the stopgap measures.
2. Indirect regulation
It refers to the state through economic means, the use of market mechanisms, the overall level of prices to regulate and control. That is, the state does not directly control the price, but to affect the price level of various factors or conditions for regulation, that is, through economic policy, regulations, laws on the microeconomic subject to constraints, so as to achieve the purpose of regulating the total price level. Such as the state through taxation, finance, credit, distribution, investment and other levers or systems, as well as price-related regulations and laws to regulate price behavior, adjust the structure of industry and consumption, so that the total social supply and total demand is relatively balanced, in order to maintain the basic stability of the total price level.
3. Combination of direct and indirect regulation and control
It refers to the state on the national economy and people's livelihood of the major very few commodity prices and prices of services to implement direct management and control of general commodity prices and prices of services to implement market regulation. The state through dual regulation means to achieve the purpose of effective regulation and control of the overall price level. Most countries in the world now use this way of regulation.
Since China's economic system is a socialist market economic system, which determines the way our country regulates the overall level of prices to indirect regulation, supplemented by direct regulation. That is, based on the law, economic means as the main way to liberalize the price of the necessary indirect macro-control, for a very small number of major commodity prices and prices of services related to the people's livelihood, the state directly manage and regulate. This not only responds to the needs of the market economy, but also to achieve the purpose of regulating the overall price level, to maintain the basic stability of prices.