Tag: price mechanism and solutions

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Questions Related to price mechanism and solutions

Multiple choice economics solution to basic economic problems under different economic systems supply curve and price determination in the market price mechanism and solutions supply

In a socialist economy, the central planning authority takes decisions to solve which of the following problems of the economy?

  1. What to produce

  2. How to produce

  3. For whom to produce

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

In a socialist economy, the central problems of the economy is solved by a centrally based planning authority that resolves all the centrally based problems related to production of goods and services in the economy which includes the following

  • What to produce? Consumer goods or capital goods?
  • How to produce? Using labour or capital?
  • For whom to produce? Rich people or poor people?

Multiple choice economics solution to basic economic problems under different economic systems supply curve and price determination in the market price mechanism and solutions supply

Under a socialist economy framework, it is the responsibility of the central bank of the country to ensure that adequate amount of goods are made available to the people.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

In a socialist economy, the central problems of the economy is solved by a centrally based planning authority which is the government that resolves all the centrally based problems related to production of goods and services in the economy which includes the problem of 'What to produce? Consumer goods or capital goods?' which is decided by allocating resources for the production keeping in mind the needs of the people i.e. consumer goods and to satisfy their wants.

Multiple choice economics solution to basic economic problems under different economic systems supply curve and price determination in the market price mechanism and solutions supply

The planning authority of a socialist economy aims at ___________ distribution of income.

  1. inequitable

  2. equitable

  3. random

  4. scattered
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation
In socialist economy, the centrally based planning authority can plans the future government expenditure on various factors of the economy like infrastructure, health, education etc in such a way that it provides adequate employment to all the people unemployed which brings stability in the distribution of income in the economy.
Multiple choice economics solution to basic economic problems under different economic systems supply curve and price determination in the market price mechanism and solutions supply

The planning authority is expected to choose a production technique that ensures that the available resources are _____________.

  1. fully utilised

  2. under utilised

  3. over utilised

  4. either B or C
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The central problems of the economy is solved by a centrally based planning authority that resolves all the centrally based problems related to production of goods and services in the economy which includes the problem of 'How to produce? Using labour or capital intensive techniques?' which is decided by allocating resources for the production keeping in mind the most efficient technique that will maximize the output of the economy. 

Multiple choice economics solution to basic economic problems under different economic systems supply curve and price determination in the market price mechanism and solutions supply

The economic problems in a mixed economy are solved with the use of ____________.

  1. price mechanims

  2. economic planning

  3. both A & B

  4. neither A nor B
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation
In a mixed economy both private as well as public enterprises utilize the resources for the production of goods and services in  the economy for personal as well as social gains. Therefore, the private sector generates price mechanism in the economy to solve to the centrally based economic problems whereas the public sector depends upon an efficient economic plan to be executed to eradicate these problems. 
Multiple choice economics solution to basic economic problems under different economic systems supply curve and price determination in the market price mechanism and solutions supply

The government in a mixed economy seeks to control price mechanism through which of the following policies?

  1. Industrial policy

  2. Fiscal policy

  3. Monetary policy

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

In a mixed economy, price mechanism are intervened by the government through many policies which includes industrial policy i.e. industrial acts, wage rate system etc, fiscal policy i.e. taxation policy on goods and services, and monetary policy i.e. central bank's qualitative and quantitative policy.

Multiple choice economics solution to basic economic problems under different economic systems supply curve and price determination in the market price mechanism and solutions supply

_______________ price mechanism operates in a socialist economy.

  1. Administered

  2. Open

  3. Free

  4. Support
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

In a socialist economy, the price mechanism i.e. price affects the demand and supply of the commodities is directed by a centrally based planning authority that controls the price mechanism to certain limits and regulates it to protect civilians from fraudulent practices.

Multiple choice economics solution to basic economic problems under different economic systems supply curve and price determination in the market price mechanism and solutions supply

'From each according to his capacity and to each according to his work' is the principle of ___________, in a socialist economy.

  1. distribution of utilities

  2. distribution of income

  3. employment segregation

  4. wealth distribution
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation
In a socialist economy, the central problems of the economy is solved by a centrally based planning authority that resolves all the centrally based problems related to production of goods and services in the economy which includes the problem of 'For whom to produce?' is decided by allocating resources for the production keeping in mind the purchasing power of the nation according to their capacity and income earned and spent by them. 
Multiple choice economics solution to basic economic problems under different economic systems supply curve and price determination in the market price mechanism and solutions supply

The role played by price mechanism in a free-enterprise economy is taken up by the ___________ in a socialist economy.

  1. state governments

  2. central bank

  3. fiscal regulatory authority

  4. central planning authority
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

In a socialist economy, the price mechanism i.e. price affects the demand and supply of the commodities is directed by a centrally based planning authority that controls the price mechanism to certain limits and regulates it to protect civilians from fraudulent practices.

Multiple choice economics solution to basic economic problems under different economic systems supply curve and price determination in the market price mechanism and solutions supply

The decision regarding distribution of income is taken by the planning authority in a capitalist economy.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Capitalist economies has private ownership where utilization of resources takes place for private gains, therefore here decision regarding the distribution of income and wealth is taken on the basis of the purchasing power of an individual where the private investors gain the maximum.