Test 6 Economic Systems

Capitalism is a competitive economic system in which private citizens own the factors of production.

• True

• False

Voluntary exchange is a characteristic of command economies.

• True

• False

The profit motive states that the consumer decides WHAT goods and services to produce.

• True

• False

The entrepreneur organizes land, capital, and labor for production in hopes of earning a profit.

• True

• False

The United States has a modified private enterprise economy, or mixed economy.

• True

• False

The purpose of government in a command economy is to...

• ensure the availability of consumer products

• encourage entrepreneurs

• make major economic decisions

• promote economic freedom

An example of a country that is based on the market economy is...

• the Inuit

• the former Soviet Union

• the United States of America

• North Korea

Which group of people ultimately determines the products that a free enterprise economy produces?

• Congress

• property owners

• local governments

• consumers

The United States can best be described as having a...

• modified private enterprise system (mixed)

• traditional system

• command economy

• pure free enterprise system

All of the following are characteristics of a command economy EXCEPT...

• it can change direction drastically in a brief period of time.

• public services are available at little or no cost.

• it is not designed to meet the wants of consumers.

• it provides workers with few incentives to work hard.