Question : Assertion: A command economy is characterized by central planning and government control over resource allocation.
Reason: In a command economy, prices are determined by the government to achieve economic stability.
Option 1: Both the assertion and reason are true, and the reason is a correct explanation of the assertion.
Option 2: Both the assertion and reason are true, but the reason is not a correct explanation of the assertion.
Option 3: The assertion is true, but the reason is false.
Option 4: The assertion is false, but the reason is true.
Correct Answer: Both the assertion and reason are true, and the reason is a correct explanation of the assertion.
Solution : The correct answer is (a) Both the assertion and reason are true, and the reason is a correct explanation of the assertion.
The assertion is true. In a command economy, economic decisions regarding resource allocation, production, and distribution are made by a central authority, typically the government. The government plans and directs economic activities, determines production quotas, allocates resources, and sets prices.
The reason provided is a correct explanation of the assertion. In a command economy, the government often sets prices for goods and services to control inflation, maintain economic stability, and achieve social and economic goals. The government's control over prices is a key feature of command economies and is used as a tool for economic management.
Therefore, the correct answer is Both the assertion and reason are true, and the reason is a correct explanation of the assertion.
