Econ Chapter 2

What is an Economic System?

• Organized way a society provides for the wants and needs of its people

• The system in which economic models are created

• The formative structure that lays over the foundation of the stock market

• A proposal of Adam Smith's that resources are in fact unlimited

Match the following Economic Systems

• private citizens own and use the factors of production in order to generate profits

• Traditional System

• a central authority that makes the major economic decisions

• Market System

• Allocation of scarce resources, and other economic activity is the result of ritual, habit or custom

• Command System

• the government owns some, but not all, of the factors of production/resources

• Communism

• factors of production are collectively owned and directed by the state; *classless*

• Socialism

The following countries economic systems are best characterized by which market structure?

• North Korea

• Traditional

• Cuba

• Command

• Inuit Peoples

• Socialist

• France

• Market

Rapid Economic Growth and no government involvement is an Advantage of what System?

Order the Following in rate of Economic Growth

• Traditional

• Mixed

• Capitalist

• Command

Volatile and Risky economies are a disadvantage of which economic systems?

Simplicity and Everyone knowing their role is an advantage of which market system?

Little innovation, low standard of living, and no personal freedom are disadvantages of which economic system?

Being able to quickly change their production, no unemployment, and basic services provided for little or no cost are advantages of which economic system?

Leaders providing for themselves first, Lack of work incentive, little or no creativity, and slow economic growth are all disadvantages of which economic system?