Economic Systems Lesson

Economic Systems

Multiple Choice

How are major economic decisions made in a command economy?

• Officials of the government control all aspects of economic activity

• Manufacturers of industrial goods control the resources

• Wholesalers of agricultural goods make most of the decisions

• Supply and demand are determined by consumers

Multiple Choice

How can one best describe the economy operating under a free enterprise system or free market system?

• Prices change according to changes in the resources and demand for products

• The government sets the prices of products and the quantity of goods

• Prices are fixed by agreements among business leaders and labor unions

• All industries except smaller businesses are controlled by the government

Multiple Choice

A mixed market economy gives full control to the consumers to make decisions on what, how much and for whom to produce.

• True

• False

Multiple Choice

In a mixed market economy, private ownership is discouraged.

• True

• False

Multiple Choice

A central planning committee has full control over the economy of a nation in a command economic system.

• True

• False

Multiple Choice

Which system is characterized by the private ownership of some resources and the public ownership of other resources and where some markets are regulated by government?

• a pure command system

• a traditional system

• a pure capitalist system

• a mixed system

Multiple Choice

A command economy that is now allowing for a role for markets is known as a _____

• Market

• Command

• Mixed system

• Traditional

Multiple Choice

In a command economy, _____

• society makes every economic decision

• owners can sell their resources to the highest bidder.

• individual choices are reflected in collective decisions and decisions are made by central planners.

• public ownership of resources is combined with free markets to direct economic activity

Multiple Choice

A major distinguishing feature between capitalist and socialist (or command) economies is that _____

• the average citizen is wealthy in capitalist economies, whereas the average citizen is poor in socialist economies.

• decision making is decentralized in socialist economies, while decision making is centralized in capitalist economies.

• resources are publicly owned in capitalist economies, whereas resources are privately owned in command economies.

• decision making is decentralized under capitalism, while decision making is centralized in command economies.

Multiple Choice

Adam Smith believed that peoples pursuit of their own self-interests _____

• tended to promote general welfare.

• would decrease the wealth of a nation, which was its ability to produce goods and services.

• caused aggregate demand to be greater than aggregate supply.

• required the governments invisible hand to keep an economy running smoothly.

Open Ended

What are your thoughts/ questions/ reactions about the lesson?