alleryAn economy in which the means of production are privately owned and the profit motive drives economic activity is called a:
ACentrally planned economy
BSocialist economy
CCommand economy
DCapitalist economy
Answer & Solution
Correct answer: D. Capitalist economy
1. Private ownership of the means of production is the mainstay of capitalism.
2. The profit motive is its driving force.
3. These two features define a capitalist economy.
4. Socialist, command and centrally planned all describe state-controlled systems, so they do not fit.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 1 Unit II "Basic Problems of an Economy and Role of Price Mechanism", p.2_
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