OBJECTIVE 2.5 Economics Mastery Check

Which of the following is an example of a traditional economy?

• The government makes all economic decisions and controls the means of production.

• Individuals and businesses make economic decisions based on supply and demand.

• The means of production are collectively owned and evenly distributed among the population.

• Economic decisions are based on customs, traditions, and cultural norms.

Answer explanation

A traditional economy relies on customs, traditions, and cultural norms to make economic decisions, distinguishing it from systems where the government or individuals dictate production and distribution.

Which point on the diagram BEST represents an economy based on communism?

• Point A

• Point B

• Point C

• Point D

Answer explanation

Point D best represents an economy based on communism as it typically indicates a system where the government controls resources and production, aligning with the principles of collective ownership and central planning.

In a communist economic system, such as that of the former Soviet Union, economic decisions are primarily made by —

• the central government

• consumers and producers

• traditional indigenous leaders

• the owners of major industries

Answer explanation

In a communist economic system, the central government controls all economic decisions, including production and distribution, rather than allowing consumers and producers to make these choices.

A common feature of the economic systems in the United States and Canada is that both —

• allow people to own private property

• restrict factory ownership to the government

• place a salary cap on business leaders’ earnings

• use government quotas to determine what to produce

Answer explanation

A common feature of the economic systems in the United States and Canada is the allowance of private property ownership, which supports individual entrepreneurship and economic freedom.

Which of the following best completes this illustration?

• Free Enterprise System

• Mercantile System

• Federalism

• Republicanism

Answer explanation

The Free Enterprise System emphasizes individual choice and competition in the economy, making it the best fit for the illustration. The other options, like Mercantile System, Federalism, and Republicanism, do not directly relate to economic principles.

What are two major differences between a free enterprise economy and a command economy? Think carefully about your response, then answer in the box provided.

Answer explanation

A free enterprise economy is driven by individual choices and market forces, while a command economy is controlled by the government, dictating production and pricing. This leads to differences in economic freedom and resource allocation.

Which point on the diagram BEST represents an economy based on free enterprise?

• Point A

• Point B

• Point C

• Point D

Answer explanation

Point A best represents an economy based on free enterprise as it likely indicates minimal government intervention, allowing for individual choice and competition, which are key characteristics of a free market system.

Which of the following is NOT a form of economics?

• Traditional economy

• Command economy

• Market economy

• Democratic economy

Answer explanation

A democratic economy is not a recognized form of economics. The main types are traditional, command, and market economies, which describe how resources are allocated and decisions are made.

Which BEST completes the diagram?

• Lowering of prices through competition

• Encouragement of new business methods

• Protection of the right to own private property

• Government control of the distribution of goods

Answer explanation

The correct choice, 'Government control of the distribution of goods', best completes the diagram as it highlights a key aspect of economic systems where the government regulates how goods are distributed, impacting market dynamics.

Which of the following best replaces the question mark in the diagram above?

• Command Economy

• Developed Economy

• GDP

• Mixed Economy

Answer explanation

A Command Economy is characterized by government control over production and resources, making it the best fit for the diagram's context. The other options do not align with this level of control.