How Economic Systems Work

What is the main idea of economics as described in the passage?

• Economics is the study of how we make decisions in a world with limited resources.

• Economics is the study of how to become wealthy.

• Economics is the study of how to avoid making choices.

• Economics is the study of how to increase resources.

Which of the following is an example of an economic choice?

• Deciding how to spend $30 on a Saturday night

• Deciding to go to bed early

• Choosing to ride a bike for fun

• Picking your favorite color

What are “needs”?

• Things required for survival, like food and shelter

• Things we would like to have

• Items we buy only on weekends

• Products that are expensive

Why is water considered a scarce resource?

• It is not free; we pay to use it

• There is not enough water in the world

• It is always free and easy to access

• Only businesses can use water

What is the best definition of economics?

• The study of how we make decisions in a world with limited resources

• The study of science and technology

• The process of making new inventions

• The art of becoming rich

What does microeconomics focus on?

• The world’s weather systems

• Large groups like governments

• Small units like individuals and businesses

• International trade

What is the meaning of “macroeconomics”?

• The study of tiny parts of the economy

• The study of plants and animals

• The study of the economy as a whole

• The science of building machines

What is an economic model?

• A toy used to teach kids

• A famous person who talks about money

• A theory that explains human economic behavior

• A robot that makes money decisions

What type of economic system does the United States use?

• Command economy

• Free enterprise capitalism

• Barter system

• Traditional economy

What is the main problem that economics tries to solve?

• How to become wealthy

• How to avoid paying taxes

• How to deal with scarcity of resources

• How to build more factories