Economic Systems

What are the three basic questions every society must answer to form an economic system?

• How much to produce, how to sell, and how to recycle

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

• Where to produce, when to produce, and why to produce

• Who produces, who consumes, and who saves

In a free market economy, what motivates businesses to produce goods?

• To provide free goods

• To help the government

• To make a profit

• To reduce pollution

What is the 'invisible hand' in a free market economy?

• A government agency controlling prices

• The self-regulating nature of the marketplace

• A secret organization managing resources

• A tool used by businesses to increase sales

What is a mixed economy?

• An economy with only government control

• An economy that only trades internationally

• An economy with no government involvement

• An economy with both free markets and government intervention

What does the circular flow model illustrate?

• The flow of water in a natural ecosystem

• The process of recycling in an economy

• The interaction between households, businesses, and the government

• The movement of goods and services in a closed economy