Types & Features of Economics

1.In a centrally planned economy, the, economic problem of deciding what to produce is dependent on
(a)average profit
(b)state command
(c)average cost
(d)relative prices
Right Choice: Option D

2.In a free market economy, the price system allocates resources
(a)under government’s directives
(b)to ensure general welfare
(c)to their best alternative uses
(d)to reduce poverty
Right Choice: Option D

3.In a planned economy, the emphasis is on
(a)public ownership and control
(b)prices and competition
(c)individual choices and decisions
(d)private ownership and control
Right Choice: Option D

4.Economic freedom is a basic feature of
(a)a market economy
(b)an industrialized economy
(c)a planned economy
(d)a developed economy,
Right Choice: Option D

5. Which of the following is applicable wholly in a capitalist economy ?
(a)there is government intervention in price determination
(b)consumer sovereignty does not exist
(c)the price mechanism allocates resources
(d) households cannot freely decide what to spend on goods and services.
Right Choice: Option D

6.A major characteristic of a Mixed Economy is that
(a)economic decisions are made by both the rich and the poor
(b)both primary and secondary production are undertaken
(c)the federal and the state governments undertaken joint projects
(d)economic activities are undertaken by both the public and private sectors
Right Choice: Option D

7. Which of these would not be included in the fundamental principles of a free enterprise economy?
(a) private ownership of factors of production
(b)the right to organize factors for productive purposes
(c)the right to make private profit
(d)government’s control of the mobility of factors of production
Right Choice: Option D

8.Which of these should determine, in a planned economy. How the factors of production are to be allocated among
different production activities?
(a)fairness
(b)the distribution of income and wealth
(c)public need, which is determined by the government
(d)private needs determined by the market
Right Choice: Option D

9.Which of the following activities of Government precludes the existence of a market economy?
(a)the imposition of taxes
(b)the control of the location of industry
(c)the central planning of all production
(d)the fixing of maximum prices for all necessities
Right Choice: Option D

10.The price mechanism
(a)regulates supply and demand
(b)rations the consumers
(c)rewards the producers
(d)allocates scarce resources
Right Choice: Option D

11.In a free-market economy, the rationing of scarce goods is done principally by
(a)the government
(b)business organizations
(c)the price mechanism
(d)consumers
Right Choice: Option D

12.In market economies, resources are allocated through the
(a)government authorities
(b)price system
(c)banking system
(d)central planning bureau
Right Choice: Option D

13.Which of the following statements describes a mixed economy?
(a)the government and the private sector interact in solving the basic economic problems
(b)the government produces and distributes all goods and services
(d)society answers the ‘what’, ‘how’, and ‘for whom’ questions only through the market system.
Right Choice: Option D

14.Which of the following is an important function of prices in a market economy?
(a) ensuring that resources are used in the most efficient manner
(b)ensuring an equitable distribution of goods and services
(c)ensuring that all industries are perfectly competitive in the long run
(d)equating level of purchases with level of needs.
Right Choice: Option D

15. In market economy, the question of what, how and for whom to produce are solved by the
(a) elected representatives of the people
(b) planning committee
(c) price mechanism
(d) government

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