SSC CPO 2025 PYQ — Question 4

Answer: (A) Socialist Economy

Explanation –

A socialist economy is known as a "centrally planned economy" because the means of production are owned by society or the government. In this system, key economic decisions such as what to produce, how to produce it, and for whom to produce it are made by a central authority or the government, rather than by market forces (supply and demand). Its primary objective is not to generate profit, but to ensure social welfare.

In such an economy, resources are allocated based on pre-determined plans. The former Soviet Union (USSR) and early China serve as prime examples of this model. In contrast, decisions in a capitalist economy are driven by the market, whereas in a mixed economy (such as India), both the government and the market play a role.

Additional Points –

Capitalist Economy: Also referred to as a 'market economy,' this system is dominated by the private sector, and its primary objective is 'profit.'

Mixed Economy: In this system, both the public and private sectors coexist. India adopted this specific model following its independence.

Potential Exam Questions and Answers –

Question: The principle of 'Laissez-faire' is associated with which type of economy?

Answer: Capitalist Economy (The term implies 'non-interference').

Question: From which country was the concept of a planned economy in India inspired?

Answer: The former Soviet Union (USSR).