ECONOMIC SYSTEM MCQ

1. Economic systems:
Capitalism, Socialism; Mixed
Economy,

2. Objective
• Students will be able to describe the types of economic
systems
• Differentiate between various types of economic
organizations on the basis of ownership and control of
resources as well as on the basis of level of
development;
• understand the meaning of economic development
and economic growth;
• distinguish between economic development and
economic growth;
• understand the important determinants of economic
development

3. What is Economic System
• MEANING OF AN ECONOMY
• An economic system describes how a society
determines what to produce, how to produce,
and for whom to distribute goods and services

4. Types of Economic Systems
• The primary goal of an economic system is to
provide people with a minimum standard of
living, or quality of life.
– (A) Capitalist or free enterprise economy
– (B) Socialist or centrally planned economy
– (C) Mixed economy

6. Economic System

7. Central Problem of Economy
• What to Produce?
• How to Produce?
• For whom to Produce?

8. Economic Sector
• Primary Sector:
• Secondary Sector:
• Tertiary Sector:

9. Multiple Choice Question:
• Q.1 What are the central problems of an
economy?
• a. What to produce?
b. How to produce?
c. For whom to produce?
d. All of the above

10. Conti..
• Q.2- Which economic system is based on
public ownership of property and social
welfare?
• a. Socialist economy
b. Capitalist economy
c. Mixed economy
d. None of the above

11. Continous..
• Q.3- Mixed economy operates with motive of
__________________
• a. Profit.
b. Social Welfare
c. Both (a) and (b)
d. None of the above

12. Conti..
• Q.4- In __________ type of economy there is
no intervention of government.
• a. Socialist economy
b. Capitalist economy
c. Mixed economy
d. None of the above

13. Conti..
• Q.5- In __________ type of economy there is
no competition level.
• a. Socialist economy
b. Capitalist economy
c. Mixed economy
d. None of the above

14. Capitalism:
Definitions of Capitalism:
• The capitalist system is one characterised by
the private ownership of the means of
production, individual decision making, and
the use of the market mechanism to carry out
the decisions of individual participants and
facilitate the flow of goods and services in
markets.

15. Two types of capitalism may be found
in the economic system:
• (1) The old laissez faire capitalism and
• (2) The modern, regulated and mixed
capitalism.

16. Characteristics of Capitalism:
• The following are the basic characteristics of a ‘pure’ capitalism
system:
• 1. Private Property:
• 2. Free Enterprise
• 3. Price Mechanism:
• 4. The Market System:
• 5. Economic Freedom
• 6. Consumers’ Sovereignty:
• 7. Unplanned Economy:
• 8. Freedom to Save and Invest:
• 9. Economic Inequalities:
• 10. Motive of Profit:
• 11. Competition:
• 12. Limited Role of Government:

17. Merits of Capitalism
• 1. Automatic Working-
• 2. Capital Formation-
• 3. Maximum Satisfaction-
• 4. Reward according to Capacity-
• 5. Efficiency-

18. Demerits of Capitalism:
• The demerits of capitalism may be discussed
as below:
• 1. Economic Inequality-
• 2. Inefficiency in Working-
• 3. Neglect of National Interest-
• 4. Lack of Coordination-
• 5. Unemployment-

19. Evaluation of Capitalism

20. Socialism:
Definitions of Socialism:
• According to Webbs, “A socialised industry is
one in which the national instruments of
production are owned by public authority or
voluntary association and operated not with a
view to profit by sale to other people, but for
the direct service of those whom the authority
or association represents.”

21. Characteristics of Socialism:
• The important characteristics of socialism are as
follows:
• 1. Government Ownership:
• 2. Central Planning:
• 3. Social Welfare:
• 4. Lack of Competition:
• 5. Restriction on Consumption:
• 6. Restriction on Occupation:
• 7. Fixation of Wages and Prices by the Government:
• 8. Equitable Distribution of Income:

22. Merits of Socialism:
The merits of socialism are as follows
• 1. Economic Equality-
• 2. Production Planning-
• 3. Economic Stability-
• 4. Proper use of National Resources-

23. Demerits of Socialism:
The demerits of socialism are as
below:
• 1. Difficulties of Management-
• 2. Lack of Freedom-
• 3. Lack of Consumer’s Sovereignty-
• 4. Lack of Rational Calculation of Cost-

24. Evaluation of Socialism:

25. Mixed Economy
• Definitions of Mixed Economy:
• According to J.D. Khatri, “A mixed economic
system is that in which the public sector and
private sector are allotted their respective
roles in promoting the economic welfare of all
sections of the community.”

26. Quotes
• Mixed economy is that economy in which both
government and private individuals exercise
economic control.” –Murad.

27. Characteristics of Mixed Economy:
• The important characteristics of mixed economy are
as follows:
• 1. Co-existence of the Private and Public Sectors
• 2. Existence of Joint Sector
• 3. Regulation of Private Sector
• 4. Planned Economy
• 5. Private Property
• 6. Provision of Social Security
• 7. Motive of Business Concerns
• 8. Reduction of Inequalities of Income and Wealth
• 9. Complete Economic Freedom

28. Merits of Mixed Economy
• 1. Efficiency
• 2. Reduced inequality
• 3. Systematic plan
• 4. Economic Stability
• 5. Consumer sovereignty
• 6. Freedom
• 7. Promotion of social welfare
• 8. Rights of Individual

29. Demerits of Mixed Economy:
• The following are the demerits of mixed
economy:
• 1.Unhealthy Competition
• 2. No freedom to pvt sector
• 3. Inefficient public sector
• 4. Unemployment and Uncertainties
• 5. Threat of Nationalization
•

30. Difference Between Capitalist, Socialist
and Mixed Economy
• Basis points:
– Ownership of Property
– Price Determination
– Motive of Production
– Role of Government
– Competition
– Distribution of income

31. • What is the single word that can best describe
today s business?
• (a) Technology.
• (b) Profit Making.
• (c) Change.
• (d) People.

32. • What is the nature of business environment?
• (a) Aggression.
• (b) Relative.
• (c) Uncertain.
• (d)Aggression, Relative and Uncertain

33. • Porter s model represents the relationship
between _______.
• (a) organizational and environment.
• (b) society and environment.
• (c) organization and society.
• (d) society and industry

34. • Rapid integration or interconnection between
countries is known as:
(a) Privatisation
(b) Globalisation
(c) Liberalisation
(d) Socialisation

35. • --------is the process of analyzing the
environment for the identification of factors
which have impact on or have implication for the
business.
• (a) Assessment
• (b) Forecasting
• (c) Scanning
• (d) None of these
•

36. • In which of the following basic categories can
business environment be divided?
• (a)Local and Regional
• (b) Regional and National.
• (c) Internal and External.
• (d) Financial and Nonfinancial

37. • Since more number of people have become more
beauty and health conscious, our economy has
witnessed an unprecedented surge in the number
of health and beauty spas and wellness clinics.
Related feature of business environment being
described in the above lines is —
(a) Totality of external forces
(b) Dynamic nature
(c) Interrelatedness
(d) Relativity

38. • Which of the following is not a component of
specific forces of business environment?
(a) Technological conditions
(b) Customers
(c) Employees
(d) Investors

39. • Which of the following are the dimensions of
the business environment:-
(a) Economic & Social
(b) Technological & Economic
(c) Legal & Social
(d) All of the above

40. • Which of the following is not a feature of
Business environment
(a) Interrelated Elements
(b) Dynamics
(c) Complexity
(d) Continuous

41. • The economic system in which both public
and private sectors co-exist is known as
___economy.
• (a) Capitalism.
• (b) Socialism.
• (c). Democratic.
• (d). Mixed

42. • __________ decides on a particular course of
action.
• (a). Legislature.
• (b) Executive.
• (c)Judiciary.
• (d) Public.

43. • ________ is an economic system based on
the principal of free enterprise.
• (a) Capitalism
• (b) Socialism
• (c) Mixed Economy
• (d) Marxism

44. • Which among the following is not opened for
private sector participation?
• (a) Railways
• (b) Telecommunication sector
• (c) Education sector
• (d) Power sector

45. • Following are the ways in which managers respond to
changes in business environment:
• (i) Strategic alliances, mergers and acquisitions of
businesses.
• (ii) Diversification.
• (iii) Collaboration with multinationals.
• (iv) Brand building.
• (v) Restructuring of business activities.
• (vi) Capital restructures.
• (vii) Customer focus.
• (viii) Latest technology.
• (ix) Compensation levels and incentive schemes