OBJECTIVE 2.5 - Free Market Interactive Article

What is a free market economy powered by?

• Government regulations

• The ability of people to buy and sell what they want

• Fixed prices set by the government

• Limited competition

In a pure market economy, what can you do?

• Only sell government-approved goods

• Sell anything to anyone else

• Charge only government-set prices

• Exchange goods without any money

What is an example of an economic exchange involving goods?

• Paying someone to fix your bike

• Buying vegetables from a farm stand

• Receiving free healthcare

• Attending a public school

What role does the government usually have in a free market economy?

• No role at all

• Setting all prices

• Some role in the economy

• Controlling all businesses

Which of the following is a key quality of a market economy?

• Government ownership of resources

• Private ownership of resources

• Limited financial markets

• Restricted participation in production

What is an example of a country with a capitalist economy?

• China

• North Korea

• Venezuela

• United States

In a market economy, what role do financial markets play?

• They restrict the use of capital

• They charge fees on transactions to earn money

• They are controlled by the government

• They do not supply loans or credit

What is one of the pros of a market economy mentioned in the text?

• Lack of competition

• Government control of production

• Competition leads to innovation

• Limited consumer demand

Which of the following is NOT a characteristic of a market economy?

• Strong financial markets

• Freedom to participate

• Government control of all resources

• Private ownership of resources

What is one way companies use their profits in a market economy?

• To pay higher taxes

• To fund future innovations and growth

• To reduce employee salaries

• To increase product prices