Tag: price mechanism and solutions

Questions Related to price mechanism and solutions

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

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

  1. What to produce

  2. How to produce

  3. For whom to produce

  4. All of the above

Show answer
Correct Option: D
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?

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.

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

  1. True

  2. False

Show answer
Correct Option: B
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.

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

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

  1. inequitable

  2. equitable

  3. random

  4. scattered

Show answer
Correct Option: B
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.

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

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

  1. fully utilised

  2. under utilised

  3. over utilised

  4. either B or C

Show answer
Correct Option: A
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. 

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

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

  1. price mechanims

  2. economic planning

  3. both A & B

  4. neither A nor B

Show answer
Correct Option: C
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. 

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

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

  1. Industrial policy

  2. Fiscal policy

  3. Monetary policy

  4. All of the above

Show answer
Correct Option: D
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.

_______________ price mechanism operates in a socialist economy.

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

  1. Administered

  2. Open

  3. Free

  4. Support

Show answer
Correct Option: A
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.

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

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

  1. distribution of utilities

  2. distribution of income

  3. employment segregation

  4. wealth distribution

Show answer
Correct Option: B
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. 

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

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

  1. state governments

  2. central bank

  3. fiscal regulatory authority

  4. central planning authority

Show answer
Correct Option: D
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.

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

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

  1. True

  2. False

Show answer
Correct Option: B
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.