1.4 Economic Systems

What is the primary function of an economic system?

• To regulate foreign policy

• To organize religious institutions

• To manage the production, distribution, and consumption of goods and services

• To control political parties

Which of the following best defines capitalism?

• Government controls all resources and profits

• Individuals and businesses own resources and operate for profit

• Property is shared equally among all citizens

• The state plans and controls all economic activities

In a market economy, who determines the prices of goods and services?

• The central government

• Trade unions

• Supply and demand

• The military

Which of the following is not an advantage of capitalism?

• Innovation

• Consumer choice

• Wealth equality

• Efficiency

What is a key disadvantage of capitalism?

• Limited economic freedom

• High taxes on the wealthy

• Wealth inequality

• Lack of consumer choice

Which feature is most associated with socialism?

• Minimal government involvement

• Profit-driven businesses

• Redistribution of wealth

• No private ownership

A socialist economy typically prioritizes:

• Individual wealth accumulation

• Profit and competition

• Equality and fairness

• Religious freedom

Which of the following is a disadvantage of socialism?

• Strong government role in services

• Reduced economic freedom

• Equal access to healthcare

• Elimination of poverty

In communism, the ideal society would have:

• A powerful central government

• Private ownership of businesses

• No social classes or government

• High taxes to fund public programs

Which statement about communism is correct?

• It encourages personal wealth and entrepreneurship

• It focuses on market competition

• It promotes collective ownership and classless society

• It avoids central planning