Society decided to pursue social goals in areas like employment, education and health. As per NCERT, what did this make necessary?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → The overall effects of the decisions of individual buyers and sellers had to be changed in part
To meet social goals, some aggregate effects of individual decisions had to be modified.
Option (1) Individual consumers had to give up trying to get the most satisfaction from their income — Incorrect. Individuals keep their aims; only the overall effect is changed.
Option (2) Markets had to be closed down and all production had to be taken over by the State — Incorrect. Markets went on; the State produces only in many instances.
Option (3) Each market had to be studied on its own, assuming that the rest of the economy stays the same — Incorrect. This is the micro approach.
Option (4) The overall effects of the decisions of individual buyers and sellers had to be changed in part — Correct. This is what the social goals required.
NCERT (2026-27): “Introduction … Adam Smith, the founding father of modern economics, had suggested that if the buyers and sellers in each market take their decisions following only their own self-interest, economists will not need to think of the wealth and welfare of the country as a whole separately. But economists gradually discovered that they had to look further. … Thirdly, and most importantly, in a large number of situations society (or the State, or the people as a whole) had decided to pursue certain important social goals unselfishly (in areas like employment, administration, defence, education and health) for which some of the aggregate effects of the microeconomic decisions made by the individual economic agents needed to be modified. For these purposes macroeconomists had to study the effects in the markets of taxation and other budgetary policies, and policies for bringing about changes in money supply, the rate of interest, wages, employment, and output. …” |