Economics MCQS

691. How are resources allocated in a market economy?
A) According to government directives.
B) Through the voluntary exchange of goods and services in the market.
C) Based on political decisions.
D) Randomly.

692. What is the role of private property in a market economy?
A) Private property rights are respected and protected.
B) Private property is discouraged.
C) Private property is controlled by the government.
D) Private property is irrelevant.

693. How does a market economy respond to changes in consumer preferences?
A) Government decides on consumer preferences.
B) Businesses adjust their production based on changing consumer preferences.
C) Consumer preferences have no impact in a market economy.
D) Prices remain fixed regardless of consumer preferences.

694. What is the role of the financial market in a market economy?
A) Financial markets are irrelevant.
B) Financial markets are controlled by the government.
C) Financial markets facilitate the allocation of capital and investment.
D) Financial markets set prices for goods and services.

695. How does a market economy encourage economic growth?
A) Through government control of economic activities.
B) Through fixed prices.
C) Through innovation, competition, and investment.
D) Through government subsidies.

696. What is the role of profit in a market economy?
A) Profit is discouraged.
B) Profit serves as a signal for successful resource allocation.
C) Profit is controlled by the government.
D) Profit is irrelevant.

697. How are disputes resolved in a market economy?
A) Through government intervention.
B) Through legal mechanisms and contracts.
C) Disputes are ignored.
D) Through random processes.

698. What is the role of international trade in a market economy?
A) International trade is discouraged.
B) International trade is encouraged for accessing diverse goods and services.
C) International trade is controlled by the government.
D) International trade has no role.

699. How does a market economy handle inflation?
A) Inflation is controlled by the government.
B) Inflation is addressed through market forces and monetary policies.
C) Inflation is ignored.
D) Inflation is determined by random factors.

700. What is the impact of government interference in a market economy?
A) It enhances efficiency.
B) It eliminates competition.
C) It may distort market outcomes and lead to inefficiencies.
D) It has no impact.