Which of the following statements is NOT true?

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → Mixed economies differ from one another in the kinds of goods they produce, not in the role of the government.

The three forms of organising economic activity differ in how much the government decides.

Option (1) In a centrally planned economy, the government may itself decide to produce a service like education. — True. If individuals do not produce enough of an important service, the government may produce it itself.

Option (2) In a market economy, all economic activities are organised through the market. — True. This is what defines a market economy.

Option (3) In reality, all economies are mixed economies. — True. Every economy has some government decisions and much market activity.

Option (4) Mixed economies differ from one another in the kinds of goods they produce, not in the role of the government. — False. Mixed economies differ in the extent of the role of the government.

NCERT (2026-27): “1.3.1 The Centrally Planned Economy … For example, if it is found that a good or service which is very important for the prosperity and well-being of the economy as a whole, e.g. education or health service, is not produced in adequate amount by the individuals on their own, the government might try to induce the individuals to produce adequate amount of such a good or service or, alternatively, the government may itself decide to produce the good or service in question.”

“1.3.2 The Market Economy In contrast to a centrally planned economy, in a market economy, all economic activities are organised through the market. …”

“… In reality, all economies are mixed economies where some important decisions are taken by the government and the economic activities are by and large conducted through the market. The only difference is in terms of the extent of the role of the government in deciding the course of economic activities.”