Economic Systems Review

Which of the following is not a problem of a centrally planned economy?

• Productivity and efficiency decline

• Individual freedoms are sacrificed

• Lack of incentives for hard work

• Free market competition causes economic inequality

What is one of the most important advantages of a free market?

• It distributes goods equally

• It protects the less fortunate

• It is easy to regulate

• It encourages growth

Who controls the factors of production in a command economy?

• The factors of production are controlled by the government

• The factors of production are privately controlled

• The factors of production are controlled by the free market

• The factors of production are controlled by the Invisible Hand

In what kind of economic system does the government make all the decisions?

• Mixed

• Laissez-faire

• Centrally planned

• Free Enterprise

Which of the following might be a positive aspect of centrally planned economies?

• Low unemployment due to guaranteed jobs

• High levels of consumer satisfaction

• Quick adjustment to changing conditions

• Incentives for workers to be innovative

State planners meet to decide what the country should focus on producing.  After much deliberation they decided it would be in the country’s best interest to use their limited resources to produce automobiles instead of other consumer goods, such as electronics or textiles.  The state planners passed their decision down to the factories, and gave the factories raw materials, workers, and other resources needed to produce automobiles.  Factories were then told how much to produce with these resources and who the final products should be shipped to

• This is an example of a traditional economy

• This is an example of a mixed economy

• This is an example of a command economy

• This is an example of a capitalist economy

In which economic system do we see high consumer sovereignty while competition keeps prices low and quality high?

• command economy

• traditional economy

• market economy

• communist economy

In which type of economy would the government make almost all of the decisions?

• market economy

• traditional economy

• mixed economy

• command economy

In what type of system would all economic decisions be made by individual buyers

                   and sellers negotiating prices in the marketplace?

• pure command system

• traditional economy

• pure free market economy

•  mixed economy

There is a country in which the government owns all the industries, businesses, and   farms.  The government sets production and wages.  The government provides all education, childcare, and medical care for all the people.  What type of economy does this describe?

• Market

• Traditional

•  Command

• Transitional