Ch 2 REVIEW: Economic Systems

How does a traditional economy answer the basic questions of WHAT, HOW, and FOR WHOM to produce?

• The government decides.

• Society decides.

• Consumers decide.

• Customs, traditions, and elders decide.

What’s a main disadvantage of a traditional economy?

• Traditional economies tend to have a higher standard of living than other types of economies.

• Sharing is a valued practice in a traditional economy.

• Individuals who act differently, break the rules, or try something new are punished.

• Everyone knows their role to play in the economy.

Which type of economy can most quickly make changes to their economic decisions?

• command

• market

• traditional

• capitalist

Who can make the decisions in a command economy?

• a king

• consumers

• elders and tradition

• individuals

Which is a modern example of a command economy?

• USA

• Inuit of northern Canada

• San people of the Kalahari Desert

• North Korea

A market economy allows buyers and sellers to do what?

• Commonly own all resources in the economy.

• Interact with government officials to demand production.

• Make their own decisions regarding what to buy or what to sell.

• Follow consumer traditions.

What’s a benefit of a market economy?

• Individuals have a large amount of freedom.

• There isn't as much uncertainty because there is no competition.

• Wealth cannot be hoarded by the rich and powerful.

• Sharing with others is valued in society.

Who affects the choices of everyone in a market economy?

• Private business owners

• The government

• No one group can affect the choices of others.

• Sellers

The level of government involvement in a mixed economy can best be described as

• very controlling

• hands-off

• varied

• indifferent

What type of economy is most common worldwide?

• mixed

• command

• traditional

• communist