KSEEB Solutions Class 8 Economics Chapter 2 Meaning And Types Of Economy Points To Remember
Economy refers to the nature of the organization of economic activities in society. Economies are also classified based on ownership of resources. The resources may be in private ownership or collective ownership. Economies are also classified on the basis of the administrative divisions. J. Brown defines economy as “a system by which people get a living”. Unfair and illegal means such as robbery, and smuggling may earn income for oneself but are socially harmful, hence not considered as gainful economic activity.
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An economy consists of individuals, economic institutions, and government and their interactions. Planning Commission was set up to plan for the socioeconomic development of India in 1950, but it was replaced by NITI Ayog in 2 015. communism was adopted by Russians in 1917 but was replaced by capitalism in 1989. Earlier, the barter system was followed but today money plays a vital role in economic transactions. We have institutions like the RBI, SEBI, World Bank, IMF, WTO, SAARC, ADB, etc., that govern the activities of individuals as well as countries.
- RBI: Reserve Bank of India.
- SEBI: Securities and Exchange Board of India.
- IMF: International Monetary Fund.
- WTO: World Trade Organization.
- SAARC: South Asian Association for Regional Co-operation.
- ADB: Asian Development Bank.
Economic systems are classified into capitalism, socialism, and mixed economies based on ownership of means of production and the extent of government intervention and regulation of economic activities. In a capitalist system, the means of production are owned by the individuals who are free to use them in any way that benefits them. Hence, it is also called a free enterprise economy. When productive resources are owned and controlled by the government to promote the overall interest of society, it is called a socialist system.
Socialism was a prominent idealism after the Second World War and was embraced by countries like Russia, China, and many eastern European countries. But the wave of liberalization since the 1990s has made almost all these countries allow the private sector to participate extensively in economic activities. A mixed economy combines the good features of both capitalism and socialism. It has a combination of elements of both free enterprise and the capitalist economy as well as a government-controlled socialist economy.
India is a classic example of a mixed economy with both public and private sectors operating within the planning and regulatory framework of the government. Industrial policies of 1948 and 1956 formulated by the Indian government made provision for the coexistence of the public and private sectors, with a larger role for the public sector.
The Planning Commission was set up in 1950 to prepare plans for the all-round development of the country and its people. The Planning Commission has so far prepared and implemented twelve five-year plans and many annual plans In 2015, the Planning Commission has been replaced by the NITI (National Institution for Transforming IndiaAyog.
The public sector was given a dominant role so that it could control the commanding heights of the economy.
Class 8 Economics Meaning And Types Of Economy KSEEB Notes
Kseeb Solutions For Class 8 Economics Chapter 2 Pdf
Meaning And Types Of Economy Exercises
Fill in the blanks with suitable words.
- Economy refers to the nature of the organization of economic activities.
- NITI Ayog was set up in 2015.
- Free enterprise is a basic feature of a Capitalist economy.
- A good example of a capitalist economy is the USA.
- Co-existence of public and private sectors is seen in Mixed Economy.
Answer the following after discussing them in groups:
Question 1. What is an economy?
Answer: Economy refers to the nature of the organization of economic activities in society.
Question 2. Mention the features of the capitalist economic system.
Answer:
Private property
Freedom of enterprise
Competiti on, markets and prices
Absence of government interference
Question 3. What is planning?
Answer: Planning refers to the deliberate actions of the government to systematically allocate and utilize available resources to achieve predetermined goals in the interest of all.
Question 4. How are economies classified on the basis of the level of development?
Answer:
On the basis of the level of development, economies can be classified into two categories:
Developed economy and
Developing economy
Kseeb Solutions Class 8 Economics Chapter 2 Notes
Question 5. How does the government regulate the activities of the private sector in a mixed economy?
Answer: Government regulates the activities of the private sector through various policies such as licensing policy, taxation policy, price policy, monetary policy, and fiscal policy.
Question 6. What is disinvestment?
Answer: The government is selling its shares in public sector industries, which is called disinvestment.
Question 7. Why is India considered a developing economy?
Answer: The national and per capita income in these countries is low. They have backward agricultural and industrial sectors with low savings, investment, and capital formation. They have a low standard of living, poor health and sanitation, high infant mortality, high birth and death rates, and poor infrastructure.
Meaning And Types Of Economy Additional Questions And Answers
Choose the correct alternative and Write the complete answer along with its alphabet in the sheet provided:
Question 1. The main aim of an economy is
- Satisfaction of human wants
- Utilization of natural resources
- Achieving economic development
- Earning huge amounts of money.
Answer: 1. Satisfaction with human wants
Question 2. The economist who defines economy as “a system by which people get a living” is
- Adam Smith
- Lionel Robbins
- A. J. Brown
- A. C. Pigou
Answer: 3. A.J. Brown
Question 3. Planning Commission was set up in India in the year
- 1950
- 1952
- 1972
- 1917
Answer: 1. 1950
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Question 4. NITI Ayog was set up in India in the year in the year
- 2015
- 2017
- 2016
- 2014
Answer: 1. 2015
Question 5. The Economic system in which production is owned by the individuals and are free to use in any way that benefits them is
- Socialist
- Secularist
- Capitalist
- Mixed
Answer: 3. Capitalist
Question 6. A country that has a capitalist economic system is
- India
- China
- Russia
- USA
Answer: 4. USA
Question 7. Privatization has become a key policy of the government since
- 1950
- 1991
- 1952
- 1971
Answer: 2. 1991
Question 8. The government is selling its shares in public sector industries, which is called
- Investment
- Disinvestment
- Shares
- Debenture
Answer: 2. Disinvestment
Kseeb Class 8 Economics Chapter 2 Important Questions
Question 9. Communism was adopted by Russians in the year
- 1950
- 1917
- 1952
- 1971
Answer: 2. 1917
Meaning And Types Of Economy Answer the following questions:
Question 1. Which are the three types of Economic systems?
Answer: Capitalist, Socialist, and Communist are the three types of Economic systems.
Question 2. What is Socialist Economy?
Answer: When productive resources are owned and controlled by the government to promote the overall interest of society, it is called a socialist system.
Question 3. What is a Mixed Economy?
Answer: A mixed economy combines the good features of both capitalism and socialism.
Kseeb Class 8 Economics Chapter 2 Summary And Notes
Question 4. Which are Unfair and illegal human activities?
Answer: Unfair and illegal means such as robbery, and smuggling may earn income for oneself but is socially harmful, hence not considered as gainful economic activity.
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Question 5. What are the features of the Economy?
Answer:
The features of the Economy are:
An economy consists of individuals, economic institutions, and government and their interactions.
The economy is a dynamic entity that is continuously changing.
Production, consumption, and investment are crucial activities of an economy.
Depending on the type of economy, economic activities keep on changing.
Individuals are both producers and consumers.
The modem economic system is complex.
There are many institutions to regulate the activities of individuals.
Question 6. Why was the Planning Commission of India set up?
Answer: The economy is a dynamic entity that is continuously changing. Planning Commission was set up to plan for the socioeconomic development of India in 1950, but it was replaced by NITI Ayog in 2015.
Question 7. How is the economic system classified?
Answer: Economic systems are classified into capitalism, socialism, and mixed economies based on ownership of means of production and the extent of government intervention and regulation of economic activities.
Question 8. Why is the capitalist economic system called a free enterprise economy?
Answer: In a capitalist system, the means of production are owned by the individuals who are free to use them in any way that benefits them.
Question 9. What are the features of a socialist economy?
Answer:
Collective ownership of means of production and wealth:
Social welfare objective.
Central Planning.
Reduction in Inequalities.
No class conflict.
Class 8 Economics Chapter 2 Meaning And Types Of Economy Kseeb
Question 10. What are the features of a mixed economy?
Answer:
The features of a mixed economy are:
Co-existence of public and private sectors.
Individual Freedom.
Economic Planning.
Price Mechanism.
Question 11. What are the characteristics of developed countries?
Answer:
The characteristics of developed countries are:
Higher national and per capita income.
Gigli rate of capital formation.
lightly trained human resources.
Better civic facilities, good health, and sanitation facilities.
Low birth rate, low death rate, and low infant mortality.
Well-developed industrial and social infrastructure.
High standard of living.
Question 12. What are the characteristics of underdeveloped countries?
Answer:
The characteristics of underdeveloped countries are:
The national and per capita income is low.
Backward agricultural and industrial sectors.
Low standard of living.
Poor health and sanitation.
High infant mortality.
High birth and death rates and poor infrastructure.
Question 13. What are the broad objectives of Indian plans?
Answer:
The broad objectives of Indian plans are:
Economic growth.
Modernization.
Self-reliance.
Social justice.
Elimination of Poverty.
Creation of conditions of near full employment.
Satisfaction of basic needs like food, clothing, shelter, education health, etc.
Kseeb Class 8 Economics Chapter 2 Meaning And Types Of Economy Question Answers
Question 14. Explain the role of the public sector in the development of the Indian economy.
Answer:
The role of the public sector in the development of the Indian economy:
It increased the pace of economic growth and reduced disparities in income and wealth.
It has prominently contributed to:
Development of infrastructure.
Establishment of basic and heavy industries.
Disperse industries in several backward regions and
promote trading and marketing activities, including international trade.
Question 15. What are the key objectives of public sector promotion?
Answer: Achievement of rapid economic development, reduction of the concentration of economic power, balanced regional development, employment generation, import substitution, and export- promotion and resource mobilization were the key objectives of public sector promotion.
Question 16. The public sector did not show better financial performance or profitability. Why?
Answer: The public sector did not show better financial performance or profitability because of many critical problems like defective pricing policy; excessive political interference; delays in decision-making; over-staffing; lack of accountability; and under-utilization of capacity.