Introduction to Business EconomicsExtraQuestion 764 of 209
All Questions

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

Options

AProduction is planned or coordinated and suffers from the business cycle
BProduction suffers from business cycle
CProduction is planned and does not suffer from business cycle
DNone of these
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Correct Answer

✅ Option c — Production is planned and does not suffer from business cycle

All Options:

  • AProduction is planned or coordinated and suffers from the business cycle
  • BProduction suffers from business cycle
  • CProduction is planned and does not suffer from business cycle
  • DNone of these

Detailed Solution & Explanation

To understand the correct statement regarding a socialist economy, let's break it down: • A socialist economy is characterized by government ownership or control of the means of production, with the aim of achieving greater economic equality. • In a socialist economy, production is planned or coordinated by the government, which means that the government decides what goods and services to produce, how to produce them, and in what quantities. • This planned production is intended to eliminate the fluctuations in the economy that occur in capitalist systems, such as the business cycle, which includes periods of boom and bust. • The business cycle is a natural part of capitalist economies, driven by factors like supply and demand, but socialist economies aim to mitigate these fluctuations through planning. • Option c is correct because it states that production is planned and does not suffer from the business cycle, which aligns with the principles of a socialist economy. • Options a and b are incorrect because they either suggest that planned production still suffers from the business cycle or that production suffers from the business cycle without mentioning planning, which does not accurately reflect the characteristics of a socialist economy.

About This Chapter: Introduction to Business Economics

Paper

Paper 4: Business Economics

Weightage

5%

Key Topics

Meaning, Scope, Price Mechanism

This chapter lays the groundwork for understanding Business Economics as a discipline. It covers the meaning, scope, and nature of economics — including key distinctions like Microeconomics vs Macroeconomics, Positive vs Normative economics, and the fundamental economic problem of scarcity. Students learn how businesses use economic principles for decision-making in a competitive marketplace.

View Official ICAI Syllabus

Exam Strategy Tip

Focus on definitions and distinctions between concepts. Questions often test whether you understand the difference between Micro and Macro, or Positive and Normative statements.

Related Comparison Tables

Microeconomics vs Macroeconomics: The Complete CA Foundation GuidePositive vs Normative Economics: Fact vs Opinion

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