Which one of the following central features is not associated with Capitalist Economy?
- A.There is generalised commodity production - it has market value.
- B.Productive wealth is held predominantly in private hands.
- C.Economic life is organised according to market principles.
- D.Economic organisation is based on planning, a supposedly rational process of resource allocation.
Correct answer
Explanation
The correct answer is D, Economic organisation is based on planning, a supposedly rational process of resource allocation. Allocation of resources through central planning is the mark of a socialist or command economy, not a capitalist one.
In a capitalist economy, the means of production such as land, factories and capital are owned mainly by private individuals and firms. Goods and services are produced for sale, so almost everything becomes a commodity with a market price. What to produce, how much and for whom is decided by the forces of demand and supply and the pursuit of profit, a mechanism Adam Smith called the 'invisible hand'. In a socialist economy, by contrast, the State owns the main means of production and a central plan decides how resources are used, as in the former Soviet Union.
A is wrong because widespread production of goods for the market is a basic feature of capitalism. B is wrong because private ownership of productive wealth defines capitalism. C is wrong because market principles guide economic life under capitalism.
Exam tip: Capitalism: private ownership and the market; socialism: state ownership and central planning; mixed economy: both, as in India.
Practice Questions
View allPlan allocation in agriculture and irrigation as percentage of total plan outlay was highest in :
- A.Seventh Five-Year Plan
- B.Third Five-Year Plan
- C.First Five-Year Plan
- D.Second Five-Year Plan
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The First Plan (1951 to 1956) gave agriculture, community development and irrigation about a third of its outlay, the highest share in any Indian plan.
Read the full explanation →Which of the following is not included in the Capital Account of the Balance of Payments of a country?
- A.Foreign Direct Investment
- B.Commercial Borrowing
- C.Invisibles
- D.External Assistance
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Invisibles are part of the current account of the balance of payments, not the capital account. The balance of payments records all of a country's transactions with the rest of the world and has two main parts.
Read the full explanation →Which one among the following was the focus of the Twelfth Five-Year Plan?
- A.Sustainable and Inclusive Growth
- B.Social Justice and Equality
- C.Food, Work and Productivity
- D.Attainment of Self-reliance
Show answer
The Twelfth Five-Year Plan (2012-17) had the theme "Faster, More Inclusive and Sustainable Growth". It continued the inclusive-growth idea of the Eleventh Plan (2007-12), whose theme was "Towards Faster and More Inclusive Growth", and added sustainability as a stated goal.
Read the full explanation →The Nehru-Mahalanobis Strategy of Development was implemented for the first time by which one of the following Five-Year Plans?
- A.First Five-Year Plan
- B.Second Five-Year Plan
- C.Third Five-Year Plan
- D.Seventh Five-Year Plan
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The Second Plan (1956–61) was built on the model prepared by the statistician P. C. Mahalanobis, which gave priority to heavy and basic industries.
Read the full explanation →The Insolvency and Bankruptcy Board of India (IBBI) was established in the year
- A.2014
- B.2015
- C.2016
- D.2017
Show answer
The Insolvency and Bankruptcy Board of India was set up on 1 October 2016 under the Insolvency and Bankruptcy Code, 2016.
Read the full explanation →