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C A foundation Economics Paper4 Part I Questions for practice


Q22) Which one of the following statements is correct regarding socialist economy?

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Solution:
The correct option is (c) Production is planned and does not suffer from business cycles in a socialist economy. In a socialist economy, production is planned by the state or by worker councils, with the aim of meeting the needs of society as a whole. This planning is done in a systematic and coordinated manner, and takes into account the available resources and the needs of the population. Since production is not driven by the profit motive, there is no need to engage in the boom and bust cycles that are characteristic of capitalist economies. As a result, a socialist economy does not suffer from the business cycle in the same way that a capitalist economy does.
Correct option is (c)