15 MCQ on Main Features of Capitalism

1. What is the primary means of production and wealth generation in a capitalist system?

• A) Government
• B) Collective ownership
• C) Private ownership
• D) Community cooperatives
• Answer: C) Private ownership

2. In capitalism, how are prices and production determined?

• A) Central planning
• B) Government intervention
• C) Market forces of supply and demand
• D) Collective decision-making
• Answer: C) Market forces of supply and demand

3. What role does competition play in a capitalist economy?

• A) Minimized to ensure stability
• B) Encouraged to stimulate innovation and efficiency
• C) Controlled by the government
• D) Eliminated to promote equality
• Answer: B) Encouraged to stimulate innovation and efficiency

4. How is profit generated in a capitalist system?

• A) Through government subsidies
• B) Collective wealth redistribution
• C) Private enterprise and market transactions
• D) Social welfare programs
• Answer: C) Private enterprise and market transactions

5. In capitalism, what is the role of the government in economic affairs?

• A) Central planning and control
• B) Limited intervention to ensure fairness
• C) Redistribution of wealth
• D) Complete control over production
• Answer: B) Limited intervention to ensure fairness

6. What is the key feature of the profit motive in a capitalist system?

• A) Minimizing competition
• B) Maximizing government control
• C) Driving individuals and businesses to seek financial gain
• D) Equal distribution of resources
• Answer: C) Driving individuals and businesses to seek financial gain

7. How are resources allocated in a capitalist economy?

• A) According to government directives
• B) Through collective decision-making
• C) Based on market forces and consumer demand
• D) Equally distributed among all citizens
• Answer: C) Based on market forces and consumer demand

8. What term is used to describe the process of individuals and businesses freely engaging in buying and selling goods and services in a capitalist system?

• A) Bartering
• B) Command economy
• C) Market economy
• D) Cooperative exchange
• Answer: C) Market economy

9. In a capitalist system, how are economic decisions made?

• A) By central planning committees
• B) Through collective decision-making
• C) By individual consumers and businesses in the market
• D) By government authorities
• Answer: C) By individual consumers and businesses in the market

10. What is the role of innovation in a capitalist economy?

• A) Discouraged to maintain stability
• B) Encouraged to promote economic growth and competitiveness
• C) Governed by government directives
• D) Restricted to large corporations
• Answer: B) Encouraged to promote economic growth and competitiveness

11. In a capitalist system, how is wealth distributed among individuals?

• A) Equally among all citizens
• B) According to government policies
• C) Based on merit and market outcomes
• D) Through collective decision-making
• Answer: C) Based on merit and market outcomes

12. What is the role of private property in a capitalist economy?

• A) Abolished to promote equality
• B) Controlled by the government
• C) Protected and encouraged for individuals and businesses
• D) Limited to communal ownership
• Answer: C) Protected and encouraged for individuals and businesses

13. What economic system is characterized by the existence of a profit and loss mechanism?

• A) Socialism
• B) Capitalism
• C) Communism
• D) Feudalism
• Answer: B) Capitalism

14. What is the primary focus of capitalism in terms of individual freedom?

• A) Restricted to protect social equality
• B) Emphasized, allowing individuals to make choices in the market
• C) Governed by collective decisions
• D) Controlled by central planning
• Answer: B) Emphasized, allowing individuals to make choices in the market

15. How does capitalism view the role of the state in economic affairs?

• A) As the central planner of the economy
• B) As a passive observer with no involvement
• C) As the sole owner of the means of production
• D) As a regulator to ensure fair competition and protect property rights
• Answer: D) As a regulator to ensure fair competition and protect property rights