Question 17 of 42
Q.(a) Compare the features of Capitalism and Socialism.
(OR)
(b) Explain the Importance of National Income.
Puducherry TnboardTamil Nadu HSC (DGE) Commerce Board 2020Subjective· 5mImportance★★★★★
40% · 17/42 Questions
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Start your 14-day free trial to unlock the full solution →(a) Capitalism = private ownership + free market + profit motive; Socialism = state/collective ownership + central planning + social welfare. (b) National income measures economic performance and living standards and is the basis for policy, planning and comparisons.
(a) Features of Capitalism vs Socialism
| Basis | Capitalism | Socialism |
|---|---|---|
| Ownership | Means of production are privately owned | Means of production are owned by the state/community |
| Motive | Profit motive drives production | Social welfare is the guiding motive |
| Decision-making | Market forces (demand and supply, price mechanism) | Central planning authority decides |
| Role of government | Minimal (laissez-faire) | Dominant/comprehensive |
| Competition & choice | Free competition; wide consumer choice | Little competition; choice is limited |
| Distribution of income | Unequal (based on ownership and ability) | Aims at equality of income and wealth |
| Examples | USA, Japan | Erstwhile USSR, China (in the past) |
(b) Importance of National Income
- Measure of economic performance — it shows the total output and the growth of the economy over the years.
- Basis for economic policy and planning — governments use national-income data to frame fiscal, monetary and development plans and to set targets.
- Standard of living — per-capita income derived from it indicates the average welfare of the people. …
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