Which of the following is NOT a basic component of capitalism?

• A. Property rights
• B. Limited government
• C. Central planning
• D. Competition

Answer: (C)

In capitalism, economic decisions come from markets and voluntary exchange, not from a central authority. The key elements that support this system are private property rights, a framework of laws and institutions that protect those rights (which is the idea of limited government), and competition among many buyers and sellers that motivates producers to improve and innovate.

Central planning, where the government directs what to produce, how to produce, and for whom, runs contrary to how capitalism typically coordinates resources. It replaces price signals and market forces with centralized directives, which is characteristic of a planned or socialist economy rather than a capitalist one.

So, while property rights enable ownership and investment, and limited government helps enforce contracts and maintain fair competition, and competition drives efficiency, central planning is not a basic component of capitalism.