ECONOMICS (CBSE/UGC NET)

ECONOMICS

ECONOMIC SYSTEMS

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
What is a DISADVANTAGE of a market economy?
A
businesses face uncertainty
B
variety of goods and services
C
Individual freedom
D
Lack of government interference
Explanation: 

Detailed explanation-1: -Benefits of a market economy include increased efficiency, production, and innovation. Disadvantages include monopolies, no government intervention, poor working conditions, and unemployment.

Detailed explanation-2: -Financial markets: In uncertain situations, investors require a higher rate of return on their capital through higher risk premia. This means that the cost of credit could increase at times when perhaps the central bank decreases its policy rate, which is the usual action taken when the economy slows down.

Detailed explanation-3: -Market uncertainty is when investors have difficulty assessing the current and future market conditions because there is a lot of volatility within the market. This specific paper looks at whether analysts’ incentives to be more opportunistic increases if there is a lot of volatility in the stock market.

Detailed explanation-4: -A business will face uncertainty when a lack of information makes an outcome difficult to predict. Businesses can face uncertainty around: entering new markets such as online or international markets. economic uncertainty such as recession.

There is 1 question to complete.