Lesson 10: Types of Economic Systems

What three questions need to be answered to determine an economic system?

• What to produce, how to produce it, and who gets it

• Where to produce, when to produce it, and why it is produced

• Who to produce for, how much to produce, and when to produce it

• Why to produce, where to produce, and who gets it

In a command economy, who controls the factors of production?

• The government

• Private individuals

• Foreign corporations

• Non-profit organizations

What is the main goal of communism?

• Abolition of private property

• Equal distribution of wealth

• Classless society

• Government control of production

Which countries are examples of socialist economies?

• China, Cuba, and the former Soviet Union

• United States, Canada, and Germany

• Denmark, Sweden, and Norway

• Japan, South Korea, and Australia

What is the concept of the invisible hand in a free market economy?

• Individuals and businesses meet society's needs when they seek their own self-interest

• Government controls all economic activities

• Consumers have no choice in the products they buy

• Businesses prioritize social welfare over profits

What is the role of the government in a free market economy?

• Maintain the rule of law, provide public goods and services, and regulate markets

• Control all aspects of production and distribution

• Ensure equal distribution of wealth

• Minimize government intervention in the economy

What is the circular flow model in an economy?

• The flow of goods, money, and resources between households, businesses, and the government

• The flow of goods and services between countries

• The flow of money in the financial sector

• The flow of resources in the resource market

Which countries have mixed economies?

• Almost all countries

• North Korea and Cuba

• United States and China

• Denmark and Canada

What is the main trade-off in government intervention in the economy?

• Increased production costs and reduced pollution

• Decreased production costs and increased pollution

• Increased income inequality and decreased economic growth

• Decreased income inequality and increased economic growth

What does economist Thomas Sowell say about economic solutions?

• There are no solutions, only trade-offs

• There is always a perfect solution

• The government should solve all economic problems

• Economists have all the answers