Economic Systems and Macroeconomics: Crash Course Economics #3

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

• What to produce, when to produce it, and where to produce it?

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

• How much to produce, who will produce it, and how to distribute it?

• Why produce, what to produce, and how to consume it?

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

• Private individuals and businesses

• The government

• A combination of private and public entities

• International organizations

What does the "invisible hand" refer to in a free market economy?

• Government intervention to correct market failures.

• The unintended social benefits resulting from individual actions.

• The direct control of production by a central authority.

• The collective decision-making process of consumers.

Which of the following is a role the government plays in a free market economy?

• Deciding the exact number of shoes to be produced.

• Abolishing private property to ensure equal distribution.

• Maintaining the rule of law and providing public goods.

• Directly controlling all industries to meet collective objectives.

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What is a characteristic of modern economies regarding government involvement?

• They are always completely free market.

• They are always completely planned.

• They exist on a spectrum of government involvement, being neither completely free market nor completely planned.

• They have no government involvement in production.

In the circular flow model, how do households earn money?

• By buying goods and services from businesses.

• By selling resources like labor to businesses.

• By receiving subsidies from the government.

• By selling products in the product market.

Which of the following is a way the government obtains money in the circular flow model?

• Selling products to households.

• Selling resources to businesses.

• Taxing households and businesses.

• Receiving transfer payments from businesses.

Which country has incorporated more free market elements into its economy over time, moving away from central planning?

• Denmark

• Canada

• North Korea

• China