Ch 2/3 Economics Systems Quiz

An economic system is

• Shaped by the amount of scarcity on society experiences

• Determined by the self interest of the individuals in a society

• The way a society uses its resources to satisfy its people’s wants

• The way a society limits its people’s desires to easily fulfill them

In a traditional economy,

• The goods of the group takes precedence over individual desires

• The individual must decide how to make a living for himself or herself

• Men and women typically exchange jobs as necessary for the family

• Each generation within a clan chooses the job it will specialize in

In a command economy,

• Resources are allocated according to consumer needs

• Decisions are made by the families, clans, or tribes

• Consumers and producers drive the economy

• Government owns the means of production

What is one disadvantage of traditional economies?

• Individual families adopt new production methods without consulting others

• The clans compete for resources.

• The system does not serve the society's goal of survival very well.

• People are less productive than they might be otherwise

Under democratic socialism, the government

• Owns all of the factors of production

• Requires absolute obedience to those in power

• Owns basic resources

• Prohibits private ownership of property

Karl Marx predicted that dissatisfied workers would revolt

• And force factory owners to raise wages and accept smaller profits

• And take control of the factories where they worked

• And use their own labor as a productive resource

• And create a society without economic classes

What was the result of the North Korean economic plan of the late 1990s and early 2000s?

• The size of the army remained constant

• The nuclear weapons program had to be cut back

• Millions of people died of hunger and malnutrition

Why do workers in a command economy have little motivation to improve their productivity?

• Central planners do not provide jobs that are appropriate for local conditions

• Workers are paid the same wages regardless of their output

• Production quotas set by planners are typically below factory’s capacity

• The lack of consumer goods means people have little reason to work hard

A trade in which both traders believe they are getting is worth more than what they are giving up is called

• Free market

• profit

• laissez-faire

• voluntary exchange

What is specialization?

• The freedom to purchase what one wants and refuse unwanted products

• People’s ability to concentrate their efforts in areas where they have an advantage

• The right of individuals and groups to own specific businesses and resources

• Sellers’ freedom to get the business of others by offering the best deal