Economic Systems

What are the three fundamental economic questions every society must answer?

• What to produce, how to produce it, and who gets it?

• When to produce, where to produce it, and why produce it?

• Who owns the resources, who controls the labor, and who sets the prices?

• How much to produce, how to distribute wealth, and how to innovate?

In a planned economy, who primarily controls the factors of production?

• Individuals and private businesses.

• The government.

• A combination of private and public entities.

• International corporations.

What concept describes how individuals and businesses, by pursuing their own self-interest, can collectively meet society's needs in a free market?

• Government regulation.

• The Invisible Hand.

• Central planning.

• Socialism.

Which of the following is a reason why government intervention is necessary even in a free market economy?

• To ensure businesses always make a profit.

• To eliminate all competition among businesses.

• To maintain the rule of law and provide public goods.

• To dictate consumer preferences and tastes.

What type of economic system is most common in modern nations?

• Completely free market

• Command economy

• Mixed economy

• Planned economy

In the circular flow model, what do households provide to businesses in the resource market?

• Goods and services

• Money for products

• Labor and other resources

• Taxes

What are the primary sources of funding for government activities in an economy?

• Selling products and services

• Taxes and borrowing

• Private investments

• International trade

Which country transitioned from a centrally planned system to incorporate more free market elements, resulting in a "socialist market economy"?

• North Korea

• Denmark

• China

• New Zealand