Which statement best describes privatization?

Which statement best describes privatization?

• A. The transfer of ownership of the public sector to the private sector
• B. Increase in government spending on public services
• C. Nationalization
• D. Public ownership of private firms

Answer: (A)

Privatization means transferring ownership and control of a government-owned business or service to private individuals or companies. When the public sector sells a state-owned enterprise to the private sector, ownership moves from government hands to private hands. This change is the essence of privatization, and it is often pursued to boost efficiency, reduce government debt, and encourage competition in the market. In contrast, increasing government spending on public services keeps ownership with the state, nationalization brings private firms into public ownership, and public ownership of private firms means the government still owns firms that were private. These describe different arrangements, not privatization.

Privatization means transferring ownership and control of a government-owned business or service to private individuals or companies. When the public sector sells a state-owned enterprise to the private sector, ownership moves from government hands to private hands. This change is the essence of privatization, and it is often pursued to boost efficiency, reduce government debt, and encourage competition in the market. In contrast, increasing government spending on public services keeps ownership with the state, nationalization brings private firms into public ownership, and public ownership of private firms means the government still owns firms that were private. These describe different arrangements, not privatization.