Practice Questions

The Reserve Bank of India (RBI) was established to serve as the central bank of India, following the recommendations of the Hilton Young Commission. To create the RBI, the RBI Bill had to be passed.

The RBI Bill was introduced and approved on March 6, 1934.

After the bill was passed, the Reserve Bank of India officially started functioning on April 1, 1935.

So, the distinction is:

Approval of the RBI Bill: March 6, 1934 ✅

RBI began operations: April 1, 1935

The Hilton Young Commission was appointed in 1926, and after examining India’s financial system, it submitted its report in 1927

The British government appointed the Hilton Young Commission in 1926 to examine India’s financial system and address the need for a central banking authority. Prior to this, India lacked a proper central bank to regulate currency and credit.

Karl Marx belongs to: German philosophers / Communist thinkers / Socialist theorists.

Karl Marx, the father of Marxist theory, argued that private property—particularly the means of production owned privately—was the root cause of social inequality and class struggle.He believed that abolishing private property would lead to a classless society and the end of exploitation.

When economic decision-making and activities are decentralized, local or smaller units of the economy can cooperate more efficiently.

Cooperation helps these decentralized units coordinate, share resources, and make better decisions in economic matters.

Communism combines political revolution with economic restructuring to achieve equality and eliminate class distinctions.

It comes from The Communist Manifesto (1848) by Karl Marx and Friedrich Engels.
The slogan calls on the working class (proletariat) across all countries to join together to overthrow capitalism and establish a classless, socialist society.
It reflects the idea of international solidarity among workers, which is a key principle of communism.

Karl Marx, the founder of communism, believed that the working class (proletariat) should seize political power from the capitalist class (bourgeoisie).
He advocated for the abolition of private ownership of major resources and means of production.
The goal was to ensure that wealth and resources are collectively owned and distributed according to need.
These principles are central to The Communist Manifesto (1848), co-authored by Marx and Engels.
This captures the core of Marx’s revolutionary and socialist philosophy.

Das Kapital (1867) was written by Karl Marx alone and analyzes the capitalist system in detail.

"The Communist Manifesto" was indeed published in 1848 by Karl Marx and Friedrich Engels, laying out the principles of communism and the call for the working class to challenge capitalist systems.

Both socialism and co-operation prioritize working together for the benefit of all rather than focusing on individual profit.

The concept of communism was introduced by Karl Marx and Friedrich Engels in the 19th century.
Karl Marx (1818–1883) developed the theory of historical materialism and class struggle, arguing that capitalism would eventually be replaced by communism.
Friedrich Engels (1820–1895) co-authored The Communist Manifesto (1848) with Marx, which outlined the principles of communism and the call for the working class to rise against capitalist systems.
So, communism as a formal ideology is largely credited to Marx and Engels.

Both communism and socialism aim to reduce or eliminate class distinctions by promoting collective ownership or control of resources and more equitable distribution of wealth.

B) Wealth concentration – Incorrect; both oppose wealth being concentrated in a few hands.

D) Private ownership – Incorrect; both limit or abolish private ownership of major resources.

C) Free market – Incorrect; both favor regulation or collective planning over a purely free market.

In communism, production is organized to satisfy the needs of all members of society, rather than to generate profit or respond to market competition.

Communism emphasizes cooperation among members of society. Resources and production are shared collectively to meet everyone’s needs, rather than competing for profit.

Communism aims to create a classless society where wealth and resources are shared collectively, eliminating distinctions between rich and poor.
Capitalism – Features class distinctions based on private ownership and wealth.
Socialism – Reduces inequality but does not fully eliminate class differences.
 Mixed economy – Combines private and public ownership; class distinctions still exist.

Communism advocates that the major means of production—like factories, land, and natural resources—should be owned collectively or by the state to eliminate class distinctions and ensure equitable distribution.

Communism aims to create a classless society where all people have equal access to resources and wealth, eliminating the divisions between rich and poor.

Communism emphasizes cooperation among members of society rather than competition. The idea is to work collectively for the common good, with resources and production shared to meet everyone’s needs.

Communism advocates for state or collective ownership of major means of production (like factories, land, and resources) to eliminate class distinctions and ensure equitable distribution.

Communism seeks to overthrow capitalism and replace it with a classless, stateless society through revolutionary means rather than relying on gradual reforms or market forces.

Communism promotes centralized or collective control over all major means of production to ensure equality and meet societal needs.

Communism seeks a classless, stateless society with collective ownership and need-based distribution. Critics say it’s hard to implement because centralized planning is inefficient, removing private incentives lowers productivity, and maintaining equality is difficult.

More of an ideology than a practicable system

Classical communism, as advocated by Karl Marx and others, supports the idea that capitalism must be overthrown, often implying revolutionary means, to establish a classless, stateless society.

The main goal of communism is to create a classless society where wealth and resources are shared collectively, eliminating social and economic inequalities.

Communism aims to distribute wealth according to individual needs rather than contributions, profits, or market forces. The principle is often summarized as: “From each according to his ability, to each according to his needs.”

In communism, the major means of production—like factories, land, and resources—are owned collectively by society rather than by private individuals or corporations. This is intended to ensure equality and eliminate class distinctions.

Communism can be seen as an extreme form of socialism because it seeks complete collective ownership, elimination of private property, and a classless society. It goes further than typical socialism in its goals and implementation.

Communism aims to abolish private property, especially private ownership of the means of production, to promote collective ownership and social equality.

Communism is associated with the idea of a classless society, where private ownership and class distinctions are eliminated.

A major advantage often attributed to socialism is providing equal opportunities through reduced inequality and social welfare measures.

Socialism focuses on promoting the welfare of the whole society rather than just specific groups.

Socialism supports the fair and equitable distribution of wealth to reduce inequality.

Socialism aims to reduce class divisions by promoting collective ownership and more equal distribution of wealth and resources.

Socialism discourages the profit motive, emphasizing social welfare and collective benefit instead of individual profit.

Communism aims to ensure work for everyone by eliminating private ownership and organizing production and employment through collective planning.

Socialism seeks to replace or eliminate capitalism, particularly private ownership of the means of production, in favor of collective or state ownership.

Socialism encourages state or collective control of production to ensure resources are used for the benefit of all, rather than private ownership, profit monopolies, or maintaining class distinctions.

Socialism emphasizes reducing economic inequality by distributing resources and wealth more fairly across society, rather than focusing on individual accumulation, competition, or private property.

A key feature of socialism is collective or state ownership of resources and means of production, ensuring wealth and benefits are shared among society rather than controlled by private individuals or monopolies.

A) Private monopolies – Feature of capitalism, not socialism.

C) Profit-based distribution – Socialism focuses on need and equality, not profit.

D) Absence of planning – Socialism relies on centralized planning, not the absence of it.

The motto of socialism emphasizes collective welfare and sharing resources so that everyone benefits, rather than focusing on individual profit or competition.

Socialism is an economic and political system where the means of production—like factories, land, and resources—are owned or regulated collectively, usually by the government or state, rather than by private individuals. The idea is to reduce inequality and ensure that wealth and resources benefit society as a whole rather than a small group of private owners.

A social outcome of capitalism is the division of society into classes—primarily the capitalists (owners of production) and the workers (laborers). This happens because wealth and resources are unevenly distributed. Capitalism does not lead to equality, a classless economy, or joint ownership; those are features of socialist or communist systems.

Capitalism promotes individualism, encouraging people to pursue their own economic interests, compete in the market, and make independent decisions. It does not aim for social equality, forced labor, or a classless structure; in fact, it often results in economic differences between individuals and classes.

Capitalism primarily focuses on profit-making and competition, which can sometimes lead to neglect of human values and ethics, such as fair treatment of workers, environmental concerns, or social welfare. In contrast, it encourages technology, consumer choices, and innovation to improve efficiency and profits.

Capitalism supports minimal government interference in economic activities, allowing private individuals and businesses to make their own decisions regarding production, trade, and investment. Full state control, worker-led production, and collective decision-making are features of socialism or planned economies, not capitalism.

Capitalism relies on the market mechanism to determine prices, production, and distribution of goods and services. Decisions are made based on supply and demand rather than centralized planning. Centralized planning, equal wages, and joint ownership are features more associated with socialism or communism, not capitalism.

Capitalism typically leads to the emergence of two main economic classes:

The capitalists (owners of production)

The workers (who sell their labor)

This division arises because resources and wealth are not equally owned, creating distinct economic groups.

Capitalism is based on competition, where individuals and businesses strive to succeed through their own effort, talent, and resources. This idea aligns with “survival of the fittest,” meaning those who perform best in the market thrive, while others may not succeed.

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