Exploring Economic Systems Quiz

What is a market economy primarily based on?

• Government planning

• Supply and demand

• Traditional customs

• Mixed regulations

In a command economy, who makes the major economic decisions?

• Individual consumers

• Private businesses

• The government

• International organizations

Which of the following is a characteristic of a mixed economy?

• Complete government control

• No government intervention

• Combination of private and public sectors

• Reliance on traditional methods

How does a traditional economy typically determine the production of goods?

• Through market competition

• By government mandates

• Based on customs and traditions

• By technological advancements

Explain how supply and demand affect prices in a market economy.

• Prices are set by the government regardless of supply and demand.

• High demand and low supply typically lead to higher prices.

• Prices remain constant regardless of supply and demand.

• Low demand and high supply typically lead to higher prices.

Compare the role of government in a command economy versus a market economy.

• The government has a larger role in a market economy.

• The government has a larger role in a command economy.

• The government has no role in either economy.

• The government has an equal role in both economies.

Identify a potential advantage of a mixed economy.

• Complete freedom for businesses

• No government intervention

• Balance between economic freedom and government control

• Reliance solely on traditional methods

Discuss why traditional economies might resist change.

• They are highly adaptable to new technologies.

• They rely on established customs and resist new methods.

• They are driven by market competition.

• They are controlled by government regulations.

Analyze the impact of government intervention in a mixed economy.

• It always leads to economic inefficiency.

• It can help stabilize the economy and protect consumers.

• It eliminates all forms of private enterprise.

• It has no impact on the economy.

Evaluate the effectiveness of a command economy in resource allocation.

• It always allocates resources efficiently.

• It may lead to shortages or surpluses due to lack of market signals.

• It relies on consumer choice for resource allocation.

• It is the most effective system for resource allocation.