Economic System_RC_2023

What are the three basic questions that all economic systems must answer?

• What should be traded? How should it be traded? Who should benefit from the trade?

• What should be consumed? How should it be consumed? Who should consume it?

• What should be produced? How should it be produced? Who should share in what is produced?

• What should be invested? How should it be invested? Who should benefit from the investment?

In a traditional economic system, how are economic decisions made?

• Based on customs and beliefs passed down from generation to generation

• By individuals making their own economic decisions without government interference

• By government leaders who control the factors of production

• Through the voluntary exchange of goods and services between buyers and sellers

What is the main characteristic of a command economic system?

• Economic activity is coordinated by private businesses and individuals responding to market signals

• Government leaders control the factors of production and make all economic decisions

• Buyers make the decisions about what should be produced

• Private individuals own and control the factors of production

What is the opposite of a pure command economy?

• Traditional economy

• Mixed economy

• Capitalist economy

• Market economy

What is the role of government in a capitalist system?

• To control and allocate a nation's resources

• To make all economic decisions and control the factors of production

• To play a relatively limited role in the allocation of resources

• To regulate and control all aspects of the economy

What is the term used to describe the economic system in which individuals are free to own and control the factors of production?

• Traditional economy

• Free-enterprise system

• Mixed economy

• Command economy

What is the profit incentive?

• The desire to make a profit by investing time, know-how, money, and other capital resources

• The government's limited role in the allocation of resources

• The competition among producers to win more business by offering lower prices or better quality

• The freedom of individuals to choose what to buy and consume

What is one disadvantage of a pure market system?

• Lack of government control and regulation

• Lack of incentives to work hard or show inventiveness

• Limited choices among consumer goods

• Unequal distribution of wealth and resources

What is the role of competition in a free-market economy?

• To guarantee equal distribution of goods and services

• To provide government intervention and regulations

• To ensure an efficient use of resources and keep prices low

• To protect buyers and regulate prices

What is private property in a capitalist system?

• Property owned by the federal, state, or local governments

• Property that is shared equally among all members of society

• Property that is controlled and allocated by the government

• Property owned by private individuals or groups