7 SS U3 Economy FORMATIVE: Economic Systems Questions 1-6

Generally, a mixed economy is an economy that

• has both command and market elements.

• relies on the use of currency as well as bartering.

• relies only on supply and demand to determine production.

• has a large industrial sector and a large agricultural sector.

A country has a growing private sector. The government uses tax incentives to encourage people to start new businesses, sets strict regulations to protect people from harmful business activities, and imposes price ceilings on necessary goods and a minimum wage for workers. Based on this information, which type of economic system does this country have?

• a mixed economy

• a traditional economy

• a market economy

• a pure command economy

A monetary exchange system is necessary for international trade because it

• helps governments control inflation and deflation rates.

• allows goods to be traded between nations with different currencies.

• makes money more secure and harder to counterfeit.

• helps governments increase the efficiency of their economies.

In a command economy, how is the question "how to produce" typically answered?

• The government decides what methods and resources will be used.

• Families pass down production methods from generation to generation.

• Individual businesses compete freely to determine methods.

• Consumers vote to decide which methods should be used.

Which best describes the difference in who decides what to produce in a command economy versus a market economy?

• In a command economy, families follow tradition, while in a market economy, kings decide.

• In a command economy, government planners decide, while in a market economy, consumers and producers decide.

• In both systems, the government decides what to produce.

• Both rely on customs and traditions to make decisions.

Which situation best explains why no country can have a completely pure market or pure command economy?

• Countries prefer not to regulate businesses for any reason.

• Pure command economies allow no government role at all.

• Pure market economies forbid competition.

• Governments always regulate at least some part of the economy, and markets always influence decisions.

A shoe company makes more basketball shoes after noticing high demand. Which economic system does this scenario best represent?

• Traditional economy

• Command economy

• Market economy

• Mixed economy with no market features

In Abdul’s country the government makes most of the economic decisions and consumer choice and entrepreneurship is limited. The economic system in Abdul’s country is most likely:

• traditional

• command

• market

• pure

A country begins as a pure market economy with very little government involvement. Over time, the government takes control of most industries and later eliminates private ownership altogether. Which sequence best describes its movement on the economic continuum?

• Pure market → mixed economy → pure command

• Pure command → mixed economy → pure market

• Pure command → mixed economy

• Pure market → command economy

A government allows businesses to compete freely but sets laws for food safety and worker rights. What does this show about its position on the continuum?

• It is purely command.

• It is purely market.

• It is a mixed economy leaning toward market.

• It is a mixed economy leaning toward command.