Read the following case study carefully and answer the questions 1-6 on the basis of the same:
An economic system is a set of principles based on which an economy can run and make decisions about which goods and services to produce, how to produce and exchange them, how should the income from the production be distributed among the factor resources and what shall be the right balance between public sector and private sector and that between free market mechanism and regulation. Capitalism is an economic system based on certain principles, like provision of private property rights, free market economy and allowing economic agents (consumers and producers) to pursue private motives and self-interest with no or minimal government intervention. In an open economy and free trade environment, countries should produce the goods domestically in which they have comparative advantage. Comparative advantage principle states that if a country can produce a particular good at least opportunity cost comparatively than the rest of the world, then the country has comparative advantage in producing that good.
1. In _________ the degree of consumer sovereignty is highest.
(a) market economy
(b) centrally planned economy
(c) mixed economy
(d) both (a) and (c)
2. Which of the following is not a feature of centrally planned economy?
(a) Control of central authority
(b) Ownership of resources by government
(c) Consumer sovereignty
(d) Dominance over economic activity by public sector
3. Which among the following countries is not capitalistic or market driven in nature?
(a) Hong Kong
(b) Ireland
(c) Russia
(d) Canada
4._________economy is an economy in which the degree of interdependence and exchange is of a moderate degree.
(a) Simple
(b) Complex
(c) Both (a) and (b)
(d) None of these
5. Read the following statements carefully and choose the correct alternative among those given below:
Statement 1 : In a simple economy, income level of the people is low.
Statement 2 : In a complex economy, wants are multiple as well as enormous.
Alternatives:
(a) Both the statements are true
(b) Both the statements are false
(c) Statement 1 is true and Statement 2 is false
(d) Statement 2 is true and Statement 1 is false
6. In mixed economy, both public and private sectors dominate the economic activity.