GED Soc. Studies 2025 - Functions of the Market

Economics | 
Functions of the Market

By Adesti Komalasari

Let's have a quick vocab check

Categorize

Options (13)

Scarcity

Utility

Opportunity Cost

Entrepreneurial Ability

Equilibrium

Public Goods

Rationing

Great Depression

Democracy

Photosynthesis

Cell Division

Feudalism

Metaphor

Classify whether the words are related or not related to the market economy

Related to the Market Economy

Not related to the Market Economy

Choose and Say

Poll

You have 3 free hours on a Saturday.

You can:

• Work part-time at a coffee shop to earn money

• Go watch a movie with friends

Poll

You run a bakery and your cupcakes are super popular. You usually make 100 a day, but demand is growing.

You can:

• Hire extra staff and make more (but pay more)

• Keep it limited and raise prices

Poll

Your city is deciding whether to offer free Wi-Fi to all neighborhoods.

You can:

• Support it as a public good

• Oppose it! let private companies compete

Let's have a Market Economy Quick Poll

Poll

“Prices should always be set by the government to keep things fair."

• Agree

• Disagree

Poll

“Competition between companies is good for consumers.”

• Agree

• Disagree

Poll

“Public services like water, electricity, and the internet should be free for everyone.”

• Agree

• Disagree

Poll

“Markets work best when the government doesn’t interfere.”

• Agree

• Disagree

Let's check or understanding of the text

Multiple Choice

Which of the following best states the central idea of the text?

• Government control improves market efficiency

• Market economies rely on pricing, competition, and self-interest to allocate resources

• Public goods are always provided by the government

• Stocks and bonds are the most reliable form of income

Multiple Choice

What is the author’s main reasoning for why private ownership leads to better services than public ownership?

• Private owners have fewer regulations to follow

• Government-owned services are always inefficient

• Private owners compete to satisfy customer needs

• Public entities lack access to advanced technologies

Multiple Choice

In the text, what does the term “opportunity cost” most closely mean?

• The amount of money spent on a good

• The best possible benefit received

• The value of the option not chosen

• The sacrifice made to increase supply

Multiple Choice

What does the stock market symbolize in the American economy according to the article?

• The success of the manufacturing industry

• The state of unemployment and inflation

• A reflection of the economic health of the nation

• The total value of national exports

Multiple Choice

Why did the federal government use rationing during WWII?

• To promote free market principles

• To increase profits of large companies

• To prevent hoarding and manage scarcity

• To create surplus for export

Multiple Choice

What can be concluded about the relationship between scarcity and choice?

• Scarcity limits government regulation

• Scarcity only applies to physical goods

• Scarcity forces individuals to prioritize their wants

• Scarcity results in economic equilibrium

Multiple Choice

What can you infer about the role of utility in economic behavior?

• It discourages consumers from saving money

• It forces companies to sell only low-priced goods

• It motivates individuals to make beneficial choices

• It makes scarcity irrelevant in decision-making

Let's Pay Attention of the following flow chart

Multiple Choice

What can be concluded about price in a market economy?

• It is regulated strictly by the government

• It balances supply and demand

• It decreases when competition is low

• It does not affect economic behavior

Multiple Choice

According to the article, competition results in all of the following EXCEPT:

• Higher quality products

• Innovation

• Government regulation

• Lower prices

Multiple Choice

In the circular flow model, what do the arrows between HOUSEHOLDS and FACTOR MARKET represent?

• Government regulations

• The sale of goods and services

• The flow of factors of production and income

• Banking and interest rates

Multiple Choice

What role do households play in both markets of the model?

• They are passive participants in the economy

• They produce and sell goods

• They sell resources in one market and buy goods in another

• They control prices through taxation

Multiple Choice

What can be concluded if the flow between households and the product market slows down?

• There is likely an increase in exports

• Government taxes are too low

• Consumer demand is decreasing, possibly leading to economic slowdown

• Businesses are increasing investment in capital

Multiple Choice

How do the roles of households differ between the product market and the factor market?

• In both, households are buyers

• Households are sellers in the product market and buyers in the factor market

• Households are sellers in the factor market and buyers in the product market

• There is no difference in household roles

Let's read a short text and answer the questions

​Read a text titled:

The U.S. Economy During the Pandemic

​The U.S. Economy During the Pandemic

The COVID-19 pandemic had a profound impact on the U.S. economy. As lockdowns were implemented in early 2020, millions of businesses, especially in hospitality, travel, and retail, either shut down or drastically reduced operations. As a result, unemployment spiked to nearly 15% in April 2020, the highest since the Great Depression.

To stabilize the economy, the U.S. government passed stimulus packages, such as the CARES Act, providing direct cash payments, unemployment benefits, and loans to small businesses. The Federal Reserve also took steps to lower interest rates and increase liquidity in financial markets.

However, the economic impact was uneven. While many low-wage workers lost their jobs, white-collar employees in tech and finance often worked from home and maintained their income. Certain sectors, like e-commerce and online services, saw massive growth.

The crisis revealed both the strengths and weaknesses of a market economy. On one hand, private companies quickly adapted by shifting to online platforms. On the other hand, the absence of a strong social safety net left millions without adequate healthcare or income support.

By mid-2021, job growth began to recover, but inflation started rising sharply, partly due to supply chain disruptions and increased consumer demand. The pandemic highlighted the importance of flexibility, government intervention, and economic resilience in times of crisis.

Multiple Choice

Which conclusion can be drawn about the role of government during the pandemic?

• Government intervention played a key role in stabilizing the economy

• The government prioritized tax cuts over relief spending

• Public policy had little effect on the economic outcome

• The government focused solely on helping large corporations

Multiple Choice

What was one major reason for the sharp rise in unemployment in April 2020?

• The Federal Reserve increased interest rates

• Many service-sector businesses closed or scaled down

• Inflation reached a historic high

• The U.S. government froze hiring across all sectors

Multiple Choice

Which sentence best summarizes the central idea of the passage?

• The U.S. economy was not impacted as badly as expected

• Online businesses and technology were not affected by the pandemic

• The pandemic exposed economic inequalities and prompted government response

• The Federal Reserve was solely responsible for job recovery

Multiple Choice

How did the economic experience of white-collar workers differ from that of low-wage workers during the pandemic?

• White-collar workers were more likely to lose their jobs

• Low-wage workers could easily transition to remote work

• White-collar workers maintained income by working from home

• Both groups experienced identical levels of job loss

Multiple Choice

All of the following are mentioned as responses to the pandemic EXCEPT

• Direct cash payments to citizens

• Loans to small businesses

• Nationwide rent forgiveness programs

• Interest rate cuts by the Federal Reserve

Let's play a Hypothesis Game

​“What Happens If…”

Open Ended

What happens if Apple stops creating new products and relies on old models?

How would this affect competition and consumer satisfaction?

Open Ended

What happens if prices for basic goods like bread and milk are capped very low by the government?

Will this benefit or harm the public?

Open Ended

What happens if people stop investing in the stock market due to fear?

How could this affect the overall economy?

I hope you enjoy learning about the US Economy more