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.
Question : Assertion: Command economy is characterized by central planning and government control over resources.
Reason: Command economies allow for individual decision-making and private ownership of businesses.
Question : Assertion: A market economy is characterized by decentralized decision-making by households and firms.
Reason: In a market economy, the forces of supply and demand determine prices and allocate resources.
Question : Assertion: A mixed economy combines elements of both market and command economies.
Reason: In a mixed economy, the government intervenes to correct market failures and ensure equitable distribution of resources.
Question : Assertion: Market economy is characterized by decentralized decision-making and private ownership of resources.
Reason: Market economies rely on government intervention to allocate resources efficiently.
Question : Assertion: Mixed economy combines elements of both market and command economies.
Reason: Mixed economies rely solely on government intervention to allocate resources effectively.
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