EPF 01.02 type of Economics Systems

Which of the following best describes a traditional economy?

• Economic decisions are based on government planning and control.

• Economic decisions are based on market supply and demand.

• Economic decisions are based on traditions, customs, or beliefs.

• Economic decisions are based on technological innovation.

Why are surpluses rare in traditional economies?

• Because they are highly industrialized and produce excess goods.

• Because they are based on hand-to-mouth living, producing only what is needed.

• Because they rely on international trade for most goods.

• Because they have advanced banking systems.

Which of the following best describes a market economy?

• Economic decisions are made by the government and based on central planning.

• Economic decisions are made by individuals and are based on exchange or trade.

• Economic decisions are made by religious leaders and based on tradition.

• Economic decisions are made by military leaders and based on force.

What is another term sometimes used to refer to a market economy?

• Command economy

• Mixed economy

• Free markets or capitalism

• Traditional economy

In a command economy, who is responsible for making decisions about the allocation of resources?

• The government

• Private businesses

• Individual consumers

• International organizations

Most modern economies, including the U.S., are considered what type of economy?

• Traditional economies

• Command economies

• Mixed economies

• Market economies

Suppose a country is described as having a mixed economy. What does this imply about its economic system?

• It only uses traditional economic practices

• It combines elements of both market and command economies

• It does not allow any private enterprise

• It is completely controlled by the government

Which of the following best describes the role of self-interest in a free market economy?

• It is the motivating force that drives buyers and sellers to consider their personal gain in economic decisions.

• It is the regulating force that ensures only the highest quality goods are sold.

• It is the reason why governments set prices for goods and services.

• It is the process by which companies merge to reduce competition.

Which of the following best describes the doctrine of "Laissez Faire" in the context of a free market?

• The belief that the government should control all aspects of the marketplace

• The belief that the government should not interfere in the marketplace

• The belief that only large corporations should regulate the market

• The belief that the market should be regulated by international organizations

What is the term used to describe the regulation of the market by self-interest and competition?

• The visible hand

• The iron fist

• The invisible hand

• The guiding principle