Economic Systems Flocab Review

Every economic system answers three questions: What is produced? How is it produced?

• For whom is it produced?

• Why is it being produced?

• Should it be produced at all?

• How easily can it be produced?

An economic system is a society’s system of production, distribution and consumption of

• natural resources

• stocks and bonds

• goods and services

• factors of production

Who owns factors of production in a command economy?

• private citizens

• the government

• religious institutions

• all choices are correct

True or False: Production is typically based on a quota in a command economy.

• True

• False

Which of the following is not a characteristic of a market economy?

• Profit is the motivation for most businesses.

• Businesses decide what and how much is made.

• Supply and demand dictate price and production.

• Competition between businesses is discouraged.

If supply is low and demand is high,

• prices rise.

• prices drop.

• prices remain flat.

• competition disappears.

In theory, which type of economic system should not experience market fluctuations?

• mixed economy

• market economy

• command economy

• all choices are correct

Which of the following best describes the Soviet Union in the 20th century?

• Capitalism led to corruption and totalitarian rule.

• Communism led to corruption and totalitarian rule.

• Capitalism led to equal distribution of wealth and total fairness.

• Communism led to equal distribution of wealth and total fairness.

Which of the following leads to better, less expensive products in a capitalist economy?

• quotas

• inequality

• competition

• market fluctuations

Which of the following countries has a mixed economy?

• China

• United States

• China & United States

• neither