There are 3 types of Economies-Capitalist's, Socialist and Mixed
What are the 3 main economic decisions in any country?
3 Main economic decisions are
- how to produce
- What to produce
- For whom to Produce
Answer to these economic Decisions depend upon whether we are Capitalist, Socialist or Mixed
Economic Decision 1 - What to produce ?
Economic Decision 2 - How to produce ?
Economic Decision 3-For whom to Produce
Summary - Capitalist ,Socialist and Mixed Economy
What is Capitalist Economy/Society?
Definiton
It is an Economy in which means of Production are owned and controlled by Private Sector
Which goods are Produced?
Those goods produced which are in Demand
How goods are Produced-Machine or Labour
Whatever is More Profitable
If labor cheaper than new machine, labor used
If machines cheaper, then machine used
How Goods be distributed amongst people?
On Basis of Purchasing Power
More goods will be produced for Rich as they have more Purchasing Power. Less goods for Poor
Example
USA
What is Socialist Economy/Society?
Definiton
It is an Economy in which means of Production are owned and controlled by Government
Which goods are Produced?
Government decides goods as per needs of society
How goods are Produced-Machine or Labour
if govt feels that there is more unemployment,
it will use labor more
if govt feels that there is labour shortage
it will use machine more
How Goods be distributed amongst people?
On Basis of What People Need
(Govt may decide to give free goods to all ,
it doesn’t matter whether they are rich or poor
Example
North Korea, USSR
What is Mixed Economy/Society?
Definition
It is an Economy in which means of Production are owned and controlled by both Government and Private Sector
Which goods are Produced?
Market produced those goods that it can produce well
Government produces essential goods which Market fails to Produce
How goods are Produced-Machine or Labour
Market Makes What is Profitable
Govt makes what society needs
How Goods be distributed amongst people?
Private Sector Makes Goods on Basis of Purchasing Power
Government Sector on basis of needs of society
Example
India
MCQ Other Books
Question 1
In the following questions, select the correct answers:
Capitalist Economy is controlled and operated by:
- Private Sector
- Public Sector
- Both (a) and (b)
- Neither (a) nor (b)
A. Private Sector
Explanation
| Capitalist Society | |
| Definition |
It is an Economy in which
means of Production are owned and controlled by Private Sector |
| Which goods are Produced? | Those goods produced which are in Demand |
|
How goods are Produced?
(More Machines or Labor) |
Whatever is Profitable
If labor cheaper than new machine,labor used If machines cheaper,then machine used |
| How Goods be distributed amongst people? |
ON Basis of Purchasing Power
More goods will be produced for Rich as they have more Purchasing Power. Less goods for Poor |
| Example | USA |
Question 2
_______ Economy is the economy in which means of Production are owned, controlled an operated by the
government.
- Mixed
- Socialist
- Capitalist
- None of these
B. Socialist
Explanation
Socialist economy is an Economy in which means of Production are owned and controlled by Government
