Choose the correct option regarding the capitalist system by taking the following statements into consideration.

Assertion (A): The capitalist system is also known as free economy.

Reason (R): In a capitalist system, the interference of the government is maximum.

Both A and R are true, and R is the correct explanation of A.

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Both A and R are true, but R is not the correct explanation of A.

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A is true, but R is false.

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A is false, but R is true.

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Solution

The correct option is C A is true, but R is false.
In a capitalist system, the resources of production are owned privately or by individuals and the distribution is driven by profit. Since production and profit drive the market, people tend to invest in industries that earn more money. The interference of the government is very minimal and hence, the capitalist system is called free economy.

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