Econ Systems Review

All economic systems must provide answers to three of the following questions. Which question is not necessarily a concern of every economic system?

• What goods and services should be produced?
• Who will receive the goods and services that are produced?
• How can goods and services be fairly distributed among all the people?
• How shall the factors of production be combined to produce goods and services?

Adam Smith’s “invisible hand” theory refers to the role of

• economic competition
• government intervention
• marketing
• production

In a command economy, producers of goods and services make decisions primarily based on

• government planning
• past customs and production methods
• current profit potential
• marketplace signals

Which kind of economy is most common today?

• command economy
• market economy
• mixed economy
• traditional economy

Which of the following is NOT a major characteristic of a pure market economic system?

• lack of competition
• freedom of enterprise
• freedom of choice
• little or no government control

The main drawback of the traditional economy is that it

• has a great deal of uncertainty.
• fails to answer the WHAT, HOW, and for WHOM questions.
• requires a large government bureaucracy.
• tends to discourage new ideas and ways of doing things.

Medicare is an example of

• a pure market economy.
• the lack of government involvement in economic activities.
• the role of government in providing social services.
• government control over international commerce

In a market economy, who decides when to exchange money for goods and services?

• government leaders
• government advisers
• individuals
• time-honored codes

What forces people to make economic choices?

• Need for shelter

• Abundance of goods

• Scarcity of resources

• Desire for profit

I decided to attend a specialty high school that offered experience in fixing cars so I could be an auto mechanic when I get older.  I’ve wanted to be one since I was a little kid.

• security
• equity
• stability
• freedom