Economic system Types, Benefits and Drawbacks

In a "Command Economy" who controls the factors of production (all economic decisions)?

• the people (individuals)

• elected financial representatives

• the government

• all decisions are voted upon

Which economic system features the individual (YOU) making the economic decisions?

• traditional

• mixed

• market

• command

Which of these is most likely to encourage people to work, rather than stay home?

• increase aid to the unemployed

• decrease wages and benefits

• increase the incentives to work

• decrease work training programs

Which situation indicates a mixed economy?

• Economic activity is controlled entirely by the private sector

• Individual choices are unaffected by government actions

• Services are provided by both private and public sectors.

• The government carries out all planning and decision making

Cuba is implementing free market reforms. What is a likely advantage of this?

• a wider variety of goods and services produced

• greater equality between the different groups in society

• increased provision of public goods

• less consumption of goods with external costs

An economy operates entirely as a market system. Which type of service would not be provided in such an economy?

• commercial banking services

• free government health services

• Private educational services

• profitable retail services

What is the government most likely to produce in a mixed economy?

• all of the services and none of the goods

• amounts of goods and services equal to those of the private sector

• no goods and services

• some of the goods and services

Who determines what goods and services are produced in a market economy?

• consumers

• employees

• government

• trade unions

What is a benefit of the free market system?

• Innovation is encouraged to increase profits.

• Negative externalities can be controlled.

• Subsidies can be used to encourage exports.

• The distribution of goods and services is fair.

What is a benefit of the market system?

• Competition ensures choice for consumers.

• Prices equal supply costs.

• Unemployment is kept to a minimum

• Wage differentials are small.