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Infographic: Capitalist Economy | Economics Class 12 - Commerce PDF Download

Infographic: Capitalist Economy | Economics Class 12 - Commerce

The document Infographic: Capitalist Economy | Economics Class 12 - Commerce is a part of the Commerce Course Economics Class 12.
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FAQs on Infographic: Capitalist Economy - Economics Class 12 - Commerce

1. What is a capitalist economy and how does it function?
Ans. A capitalist economy is an economic system where private individuals or businesses own capital goods and are responsible for production and distribution of goods and services. This system operates on the principles of supply and demand, where prices are determined in a free market. The role of the government is typically limited to regulation and protection of property rights, while allowing market forces to guide economic activity.
2. What are the key characteristics of commerce in a capitalist economy?
Ans. Key characteristics of commerce in a capitalist economy include competition, profit motive, consumer choice, and the use of financial markets. Competition drives innovation and efficiency, while the profit motive encourages businesses to improve their products and services. Consumer choice influences what goods and services are produced, and financial markets facilitate the movement of capital to support business activities.
3. How does capitalism impact economic growth and development?
Ans. Capitalism can promote economic growth and development by encouraging investment, innovation, and entrepreneurship. The profit motive incentivizes individuals and companies to develop new technologies and improve efficiency, which can lead to higher productivity and economic expansion. Additionally, market competition can result in better quality goods and services, further contributing to overall economic development.
4. What are the drawbacks of a capitalist economy?
Ans. While capitalism has many advantages, it also has drawbacks, including income inequality, market failures, and potential for monopolies. Income inequality can lead to social unrest and limit access to essential services for lower-income individuals. Market failures, such as monopolies and externalities, can distort prices and reduce overall welfare. Furthermore, capitalism may prioritize profit over social and environmental concerns, leading to negative consequences.
5. How do government regulations influence commerce in a capitalist system?
Ans. Government regulations play a crucial role in shaping commerce within a capitalist system. Regulations can establish rules for fair competition, protect consumers, ensure product safety, and address externalities. While some regulations aim to promote a level playing field, excessive regulation can stifle innovation and economic growth. The balance between regulation and free market principles is essential for a healthy capitalist economy.
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