Review for Economic Systems CFA

How do countries with command economies answer the three basic economic questions?

• Private citizens decide what goods to produce, how to produce them, and for which consumers to produce them based on supply and demand. Private citizens do not have a say in economic decisions in countries with command economies.

• Private citizens provide guidance, but the government bases its answers to the three questions on how older generations answered the questions. Private citizens do not have a say in economic decisions in countries with command economies.

• The government provides guidance, but private citizens base their answers to the three questions on their own personal wants and needs. Private citizens do not have a say in economic decisions in countries with command economies.

• The government decides what goods to produce, how to produce them, and for which consumers to produce them based on government policy. In command economies, a central authority, usually the government, makes all economic decisions.

What do countries with market economies base their answers to economic questions on?

• what skills workers have

• what consumers demand

• what previous generations produced

• what the government wants to produce

What do countries with traditional economies base their answers to economic questions on?

• what skills workers have

• what consumers demand

• what previous generations produced

• what the government wants to produce

Which statement BEST summarizes the variety of economic systems throughout Europe?

• A. Most of them are primarily command economies with elements of market economies.

• B. Most of them are command economies, and the rest are nearly pure market economies.

• C. Most of them are nearly pure market economies, and the rest are command economies.

• D. Most of them are primarily market economies with elements of command economies.

Based on the diagram, what type of economy do MOST European countries have?

• a mixed economy

• a pure command economy

• a pure market economy

• a traditional economy

Use the diagram to answer the question. Which statement about the economies of the United Kingdom and Germany is correct?

• A. The United Kingdom and Germany are both closest to point 1.

• B. The United Kingdom and Germany are both closest to point 2.

• C. The United Kingdom is closest to point 1 and Germany is closest to point 3.

• D. The United Kingdom is closest to point 3 and Germany is closest to point 1.

What type of economy do the United Kingdom, Germany, and Russia all have?

• mixed economy

• pure command economy

• pure market economy

• traditional economy

How are the economies of the United Kingdom, Germany, and Russia different?

• The Russian economy is more market-leaning than the UK and German economies.

• The German economy is more market-leaning than the UK and Russian economies.

• The Russian economy is more command-leaning than the UK and German economies.

• The German economy is more command-leaning than the UK and Russian economies.

The United Kingdom has a mixed, market-leaning economy. Based on this information, how does the United Kingdom answer the three basic economic questions?

• The government decides what goods to produce, how to produce them, and for which consumers to produce them based on its own directives.

• Private citizens decide what goods to produce, how to produce them, and for which consumers to produce them based entirely on supply and demand.

• Producers decide what goods to produce, how to produce them, and for which consumers to produce them based on how people in the past answered those economic questions.

• Private citizens decide what goods to produce, how to produce them, and for which consumers to produce them based on supply and demand, but must follow government regulations.

The Soviet Union operated a command economy. Based on this information, how were the three basic economic questions answered in the Soviet Union?

• The government decided what goods to produce, how to produce them, and for which consumers to produce them based on its own directives.

• Private citizens decided what goods to produce, how to produce them, and for which consumers to produce them based on supply and demand.

• Producers decided what goods to produce, how to produce them, and for which consumers to produce them based on how people in the past answered those economic questions.

• Private citizens decided what goods to produce, how to produce them, and for which consumers to produce them based on supply and demand, but were bound by government regulations.