Economic Systems

Who benefits from the free market economy?

• consumers and producers

• people living in poverty

• wealthy entrepreneurs

• the federal government

This photograph represents the type and scale of economic activity that is typical of a

• specialized economy.

• traditional economy.

• centrally planned economy.

• free market economy.

What does this graphic suggest about economic equity in American society since 1976?

• Equity has remained stable over time.

• Equity has steadily decreased over time.

• Equity was achieved in the early 2000s.

• Equity has steadily increased over time.

Select the phrase that Adam Smith used to summarize the self-regulating device of the marketplace.

• Invisible Hand

• Own Gain

• Annual Revenue

• Promote An End

Which of the following is a function of firms in the market economy?

• They ensure that the monetary flow is greater than the physical flow.

• They supply households with land, labor, and capital.

• They convert land, labor, and capital into goods and services.

• They consume the goods and services that households produce.

"Competition encourages entrepreneurs to find new ways of producing goods and services."

This statement MOST CLOSELY relates to which of the advantages shown in the concept web?

• efficient response to changing marketplace conditions

• freedom of choice for consumers and producers

• variety of goods and services

• growth and innovation

In a society with a command economy, who answers the basic economic questions?

• a military commission

• producers in markets

• consumers in markets

• a central government

What is one of the major disadvantages of a centrally planned economy?

• It lacks the capacity to produce factory goods because its resources are scarce.

• It places individual freedoms above the pursuit of societal goals.

• It focuses on rewarding innovation instead of guaranteeing jobs and income.

• It does not allow producers of goods and services to respond to consumer signals.

"Capitalist production . . . develops technology and the combining together of various processes . . . only by sapping the original sources of all wealth—the soil and the laborer."

—Karl Marx, The Communist Manifesto

Which statement challenges the main idea of Marx's statement?

• Communist workers get government protections.

• Capitalist workers are treated poorly.

• Capitalism is harmful to the environment.

• Labor unions and the government protect the rights of American workers.

Which of the following BEST summarizes the trend shown in this table?

• China's shift toward a market economy has helped its economy thrive.

• China's shift toward a command economy has helped its economy thrive.

• China's shift toward a market economy has had negative economic results.

• China's shift toward a command economy has had negative economic results.