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Introduction
Question
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What is a market economy? 

Answer

In a market economy, all economic activities are organised through the market. It is an economic system in which economic decisions and the pricing of goods and services are guided solely by the aggregate interactions of a country's citizens and businesses and there is little government intervention or central planning.

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Some More Questions From Introduction Chapter

What is meant by macroeconomic theory?

What is the difference between microeconomics and macroeconomics?

Briefly state meaning of the following terms as used in economics.
1. Economy (D 2010 C), 2. Goods, 3. Services, 4. Wants, 5. Resources,
6. Households, 7. Firms, 8. Commodities, 9. Production, 10. Consumption

Explain central problems with the help of PP curve. How does PP curve help in explaining the central problems?

(i) Why is PP curve downward sloping from left to right?    (D 2006C)

(ii) Why does PP curve look concave to the origin? 

Can the PP curve shift?

State factors which cause rightward (upward) shift of PP curve.

 How is PPC affected by unemployment in the economy? Explain.

Massive unemployment shifts the PPC to the left. Defend or refute.