2.4 Mixed Economies

Governments have often become involved in market-based economies in order to

• preserve the traditional economy.
• address various limits of the free market system.
• reduce disruptive innovation.
• address shortcomings of central planning.

Police protection and national defense are examples of what government role in the circular flow model?

• producing goods and services from factors purchased in the factor market
• making purchases of land, labor, and capital in the product market
• contributing to the monetary flow between households and firms in the factor market
• hindering the physical flow of factors between households and firms in the product market

China’s economy is considered more mixed than North Korea’s because China

• recently took control of Hong Kong.
• has freer markets.
• has traditionally relied on central planning.
• was the first to adopt communism.

What is an argument that some analysts use to criticize government regulation?

• It endangers safety.
• It promotes competition.
• It results in inefficiency.
• It provides security.

Private property ownership and some government regulation of the economy are basic characteristics of which economic system?

• command economy
• free enterprise system
• mixed economy
• traditional economy

Which of these is an example of restrictions that government places on the use of business property?

• corporate income taxes
• regulation of competition
• providing for security
• zoning laws

Government involvement in a modern economy is generally defended because

• the marketplace always meets the needs and wants of society's members.
• the marketplace has many incentives to create public works such as parks.
• governments are more able than firms to meet some needs and wants of society.
• free market principles do not encourage economic growth.

A government hiring freeze would directly impact what aspect of the circular flow model of a mixed economy?

• businesses
• factor market
• product market
• transfer payments

Which is an example of why the U.S. government makes transfer payments?

• to support retired people
• to limit economic freedom
• to create a command economy
• to suppress the factor market

What is one way in which the economy of Singapore varies from the economy of Iran?

• Singapore's economy relies on central planning to a greater extent than Iran's.
• Iran's economy relies on free market principles to a greater extent than Singapore's.
• Iran's government is less involved in the nation's economy than Singapore's government is.
• Singapore's government is less involved in the nation's economy than Iran's government is.