Economic Systems Review 2

A free market economy is characteristic of all of the following EXCEPT

• economic freedom where businesses can produce whatever they wish, people can purchase whatever they wish
• a great variety of goods and services due to competition for the consumer.
• stable prices due to competition between customers.
• a limited amount of goods and services because the government controls the economy.

In reality, most modern market-style economic systems today are "mixed economies"

• because the Government completely controls the economy.
• because the Government has adopted the principles put forth in the communist manifesto.
• because in each market-style economy there is some level of government regulation.
• because the Government has no interference with the economy

A local student received her first paycheck from her job as a human sign for Domino's Pizza. She used the money she earned to buy online music from the following artists: Lady Gaga, 22 Savage, Katy Perry and Justin Beiber. By purchasing these products she was casting her "dollar-vote" towards the producer of these goods. The power of her purchase as a consumer in the market is known as

• supply and demand, which indicates what should be produced for the people in the United States by the government.
• opportunity cost, which indicates the choice he made in light of unlimited resources.
• consumer sovereignty, which is the ultimate force behind the production of goods and services in the United States.
• regulation, which shows how many diverse cd's that he actually prefers.

All of the following are true of a Command Economy EXCEPT

• total government control of the economy.
• Cuba and North Korea are command economies.
• individuals have an abundance of freedom over their economic future regarding employment and spending.
• profit is illegal and there is little to no private ownership of property.

In a command economy

• wealth is distributed based on the principles of economic equity and only the rich and the poor exist.
• the three economic questions are answered by the central planners of the government.
• households and firms make the decisions on the three economic systems.
• tradition determines the three economic questions.

In command style economies, which of the following exists?

• profit motive.
• competition in the economy amongst various businesses.
• consumer sovereignty.
• government control over the economy.
• private ownership.

Which of the following is NOT a key economic question?

• What goods and services should be produced?
• How should these goods and services be produced?
• Who should these goods and services be produced for?
• How should it be ensured that goods and services are paid for?

Competition in the U.S. economy acts as an advantage in all of the following ways EXCEPT

• it keeps the prices of goods and services balanced.
• it allows consumers a variety of choices in the marketplace as firms strive to produce more and better products.
• it promotes consumer sovereignty, because consumers have the money that the firms desire.
• it promotes the dominance of one company in the market.

Profit Motive refers to a major incentive in the United States that

• allows companies to invest in their human capital.
• allows companies to specialize such as an assembly line workers, which is also known as division of labor.
• provides an incentive for individuals and companies to produce because of the desire to make money.
• provides an incentive for government agencies to monitor the economy choosing the best line of oversight.

Under market economies, one advantage is

• the fact that everyone is treated equally and the lack of a class-system.
• the ability to own private property, which allows individuals and businesses to own, buy and sell property.
• voluntary exchange, the fact that two parties are competing against each other during a transaction.
• consumer sovereignty, which is government control of businesses and the influencing force behind the production of goods and services in this country.