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LESSON-9 ECONOMIC SYSTEMS AND ECONOMIC POLICIES. Q: What are the three types of economic systems? Ans : Capitalist Economy, Socialist Economy, Mixed Economy. Q: Define capitalist economy? Ans : Capitalist economy is the economy in which the ownership of means of production is with private individuals who work with the motive of making profits..

Q: What are the features of Capitalist economy? Ans : * Freedom for the entrepreneurs to produce any commodity. * Right to private property. * Profit motive. *Transfer of wealth to legal heir. * Free market with no control over price. * Consumers sovereignty. * Competition among entrepreneurs to sell products..

Q: Define police state? Ans : The main functions of a country is to maintain law and order and to defend the country from foreign invasion. Such nations are known as police state. Q: How does price mechanism influence producers and consumers? Ans : When the price of goods and services increase, the producers will have a tendency of making profit through an increase in production. Likewise, as the price of goods.

and services fall, producers try to reduce the output. But with a fall in price, demand increases and this will induce the producers to increase the production. Q: Define price mechanism? Ans : The rise and fall in the price influence the producers and consumers and consequently control the availability of goods and services. This is called price mechanism. Q: Define socialist economy? Ans : Socialist economy is an economic system in.

which the means of production are owned by public sector. This economic system works on centralized planning. Q: What are the features of socialist economy? Ans : * Activities aimed at social welfare. * Absence of private entrepreneurs. * Absence of private ownership of wealth and transfer of wealth to legal heir. * Economic equality. Q: Define mixed economy? Ans : Mixed economy is the economy that has.

Certain features of both the capitalist economy and socialist economy. Q: What are the features of mixed economy? Ans : * Existence of both private and public sectors * Economy works on the principle of planning * Importance to welfare activities * Existence of both freedom of private ownership of wealth and economic control Q: Today and capitalist economies cannot be seen. Why? Ans : Pure form of capitalist or socialist economies.

cannot be seen anywhere today. There is government intervention in capitalist economies like those in the United Kingdom and the United States of America. Private ownership of wealth and freedom of market have been permitted in socialist countries like China and Cuba..

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