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Consider the following statements:
1. The Market Economy, as discussed by Adam Smith, operates primarily through government regulations.
2. In a Socialist model, the state controls natural resources but not labor.
3. The Non-Market Economy is also known as a command economy or centrally planned economy.
Which of the statements given above is/are correct?
  • a)
    1 Only
  • b)
    1 and 2 Only
  • c)
    2 and 3 Only
  • d)
    3 Only
Correct answer is option 'D'. Can you explain this answer?
Verified Answer
Consider the following statements:1. The Market Economy, as discussed...
1. The Market Economy, as discussed by Adam Smith, operates primarily through government regulations. *(Incorrect)*: Adam Smith's Market Economy is characterized by minimal government intervention, emphasizing the "invisible hand" of the market forces of demand and supply. It operates through laissez-faire policies, which advocate for non-interference by the government.
2. In a Socialist model, the state controls natural resources but not labor. *(Incorrect)*: In the Socialist model, the state controls both natural resources and labor. This ensures that resources are used for the well-being of all and prevents economic inequality by eliminating private property rights.
3. The Non-Market Economy is also known as a command economy or centrally planned economy. *(Correct)*: The Non-Market Economy, often linked to socialism and communism, is indeed referred to as a command economy or centrally planned economy. In this system, the state makes all economic decisions and controls the production and distribution of goods.
Therefore, the correct answer is Option D (3 Only).
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Most Upvoted Answer
Consider the following statements:1. The Market Economy, as discussed...
Explanation:
1. The Market Economy:
- The Market Economy, as discussed by Adam Smith, operates primarily through the mechanism of supply and demand, with minimal government intervention.
- Adam Smith, known as the father of modern economics, believed that individuals pursuing their self-interest in a competitive market would lead to the best outcomes for society.
2. Socialist Model:
- In a Socialist model, the state does control natural resources, as they are considered the property of the people.
- However, in a Socialist system, labor is not necessarily controlled by the state. Instead, the emphasis is on collective ownership and decision-making.
3. Non-Market Economy:
- The Non-Market Economy, also known as a command economy or centrally planned economy, is characterized by government control over the allocation of resources and production decisions.
- In this type of economy, the government determines what goods and services are produced, how they are produced, and for whom they are produced.
Therefore, out of the given statements:
- Statement 1 is incorrect as the Market Economy operates primarily through free market mechanisms without significant government regulations.
- Statement 2 is incorrect as in a Socialist model, the state does control labor to some extent, along with natural resources.
- Statement 3 is correct as the Non-Market Economy is indeed known as a command economy or centrally planned economy.
Thus, the correct answer is option 'D' - 3 Only.
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Consider the following statements:1. The Market Economy, as discussed by Adam Smith, operates primarily through government regulations.2. In a Socialist model, the state controls natural resources but not labor.3. The Non-Market Economy is also known as a command economy or centrally planned economy.Which of the statements given above is/are correct?a)1 Onlyb)1 and 2 Onlyc)2 and 3 Onlyd)3 OnlyCorrect answer is option 'D'. Can you explain this answer?
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