What are the three fundamental questions that define an economic system?

• What to produce, where to produce, and at what price to produce

• How to produce, when to produce, and how much to produce

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

• Who to produce for, when to produce, and where to produce

Who classified the major inputs required to produce goods as land, labor, and capital?

• Milton Friedman

• John Maynard Keynes

• Adam Smith

• Karl Marx

What is a key characteristic of a true communist society according to Karl Marx?

• Free market competition

• Unregulated markets

• Abolition of private property

• Government ownership of production

What does the 'invisible hand' in free market economies refer to?

• Government regulation

• Central planning by authorities

• The role of technology in production

• Consumer choice guiding resources to their most valued use

Why do governments need to intervene in free market economies?

• To eliminate private property

• To take control of major industries

• To regulate production and protect public interests

• To ensure profit maximization

What is a mixed economy?

• An economy where production is entirely controlled by the government

• An economy with no government intervention

• An economy with elements of both free markets and government intervention

• An economy based solely on the agricultural sector

What does the circular flow model illustrate?

• The flow of goods and services in a command economy

• The cycle of money in a purely capitalist system

• The process of international trade

• The interaction between households, businesses, and the government in an economy

How has China's economy changed over time?

• From a socialist market economy to a command economy

• From a command economy to incorporating more free market elements

• From a free market to a planned economy

• It has remained a purely communist economy

What is an example of a trade-off in economic policy?

• Increasing car production costs to meet safety regulations

• Eliminating taxes for all businesses

• Removing all government regulations

• Allowing complete freedom in market pricing

Why is flexibility important in applying economic theories to real-world scenarios?

• Because economic theories are too complex to understand

• Because all economies function in the same way

• Because economic theories are always correct

• Because real-world scenarios are unpredictable and diverse