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WorksheetsUnit 2 Economic Systems Exam Review
Total questions: 50
Worksheet time: 47mins
Each of the following are elements of a traditional economic system EXCEPT for one. Which one would not be found in traditional economics?
government provides care for the disabled
men are hunters
children learn skills and knowledge from family, complete work and chores to help the family
mothers raise children and tend to crops
What role do the wants and needs of citizens play in a command economic system?
they are the driving force of a command economy
they are rarely considered in a command economy
as long as it fits as a need for survival of the group, it will be provided
Cuba, North Korea, The Republic of China, and Russia have all had _____ economic system.
market
free enterprise
traditional
command
What drives a market economy?
consumers and producers
customs and traditions
government
fairness and equality of social classes
Select all of the ways self interest plays a role in a market economy. (more than 1)
consumer sovereignty
profit motive
specialization
public goods and services
What are the 3 questions every society must answer when determining its economic system? (more than 1)
What will be produced?
How will it be produced?
Where will it be produced?
Who is going to have access to what is produced?
What was occurring during Karl Marx's time that led him to his economic philosophy? (more than 1)
industrialists and the upper class grew rich while workers remained poor
bank runs and stock market collapse
unfair treatment of workers and lower social classes
communism
What did Karl Marx believe was going to be a logical outcome of the struggle occurring between business owners and workers?
the business owners would increase wages for workers
the workers would rise up and revolt against the upper class
the government would create minimum wage laws
the workers would quit their jobs, forcing businesses to go bankrupt
Karl Marx was the author of two books that explained his philosophies about government, social classes, and the economy. What were the books? (more than 1)
Das Kapital
Inquiry Into the Wealth of Nations
The Communist Manifesto
Mein Kampf
The rights of individuals and groups to own businesses and resources is known as _____.
self interest
free enterprise
nationalized
private property rights
Why is it important to legally protect private property rights in a free market?
to prevent government control and higher prices
without legal protection, profit cannot be made by the owner of the property
to prevent competition from driving down prices
to encourage a more developed global economy
Any place where people buy and sell goods and services is known as ____.
an economy
a global trade environment
a market
private property environment
Define an economic system:
a way society uses resources to satisfy peoples wants
when a government considers the needs of a country and then allocates resources according to what they think is best for the people
consumers and producers determine what is produced in an economy
each citizen has a specific role they play within the system; traditions and skills are passed down through generations
Define a traditional economy:
individual choice and voluntary exchange direct economic decisions
consumers choose products to meet their wants, producers benefit from consumer purchases
people produce and distribute goods according to customs handed down from generation to generation
government allocates resources based on what they believe is best for the country
Define a command economy:
government makes all economic decisions
men are hunters, women tend crops, children help with chores to learn skills
what is best for the group and overall survival are the goals of this system
consumers voluntary choose products they want, producers earn profit from their purchases
Define a market economy:
what's good for the group drives economic decisions in this system
survival of the individual and survival of the group drive economic decisions in this system
governments makes all economic decisions in this system
individual choice and voluntary exchange drive economic decisions
Define a centrally planned economy:
system in which each level of government makes its own decisions on what's best for it's citizens
system in which the central government makes all economic decisions
system in which skills, traditions, and customs are passed down through generations, thus creating a planned economy
a plan for workers to rise up against industrialist business owners to remove social classes and create their own economy
Define socialism:
an economic system in which government owns some or all of the factors of production
economic system in which government owns all of the factors of production and there is little or no political freedom
the elimination of social classes in an economic system
producers own the factors of production and produce what consumers want
Define communism:
an economic system in which government owns all of the factors of production and there is little or no political freedom
an economic system in which government owns some of all of the factors of production
an economic system in which producers decide how to use the factors of production to satisfy consumer wants
a system of voluntary exchanges in the market place driven by self interest
The economic principle that means government should not interfere in the market place is known as ____.
capitalism
laissez faire
authoritative economics
voluntary exchange
An economic system that is based on private ownership of the factors of production is known as _____.
socialism
communism
capitalism
mixed economic system
What belief does capitalism operate under?
producers will create goods and services that consumers will demand
consumers will only demand what they need for the benefit of the group
government will provide some public goods for the citizens of a country
government will provide all public goods for the citizens of a country
Explain voluntary exchange.
a trade in which both traders believe that what they are getting is worth what they are giving up
the efficient use of the factors of production
the law that legal protects private property rights
when competition creates a better quality product
What is a seller's self interest in a voluntary exchange?
They are giving up a good/service they produced in order to make a profit.
They are gaining a valuable employee that will provide quality goods and services.
They are able to access more resources so that they can more products.
They are interested in expanding their business through the exchange.
How does competition benefit a free market economy? (more than 1)
forces companies to be innovate
forces companies to create a better quality product
regulates price to prevent it from becoming too high
it allows for a business to control what is happening in the market
All of the following explain consumer sovereignty in a free market except for one. Which one does not.
consumers have ultimate control over what is produced
consumers can buy what they want and reject what they don't want
producers will produce what consumers demand
consumer sovereignty limits a consumer's self interest
All of the following are ways that consumer sovereignty serves as a limit to producer self-interest except for one. Which one does not?
producers cannot set prices too high in order to maximize their profit
if the quality of the good/service is poor, the consumer will not buy it, limiting producer profit
if producers waste resources by failing to use all of the materials they ordered for production, it will limit their profit
if a consumer has a negative customer experience with a business, they will not buy from that business again, therefore limiting their profit
Choose all of the options that represent a disadvantage of a market economy.
the profit motive ensures resources will be allocated efficiently
political and economic freedom
no public goods or services are available to citizens
the profit motive provides incentive for new good ideas
Why does the profit motive help lead to efficient use of resources by producers? (more than 1)
producers will use their resources to only make products consumers will buy
producers will not be wasteful of the resources because it will cost more to produce, therefore limiting their profit
because government controls and owns the resources, they will punish businesses that do not use them efficiently
business will engage in foreign trade to make more profit and cover any losses created by inefficiently using their resources
What was the name of the book published by Adam Smith to explain his economic philosophy?
Inquiry into the Wealth of Nations
Das Kapital
the Communist Manifesto
What moral principles did Adam Smith believe motivated humans? (more than 1)
fairness and equal treatment
self interest
charity and sharing of wealth
profit
According to Adam Smith, how would self interest and competition affect prices of goods and the number of choices of goods in a market?
prices would be more fair and there would be more choices of goods available in the market
prices would be too low for businesses to make a profit, therefore there wouldn't be many goods to choose from
prices would be high and businesses would be able to make a enough profit to offer many choices of goods
he did not think self interest and competition would affect the prices of goods and the number of choices of goods available
What do command economies often cause? (more than 1)
shortages
poor quality of goods
lack of choice (variety of goods/services)
efficient use of resources
What occurred in the US when there was a true (pure) free market system? (more than 1)
workers were paid a fair wage and businesses thrived
terrible pollution and unsafe working conditions
workers were treated terribly, monopolies controlled the economy
workers revolted and created a classless economic system
Today's economy for the United States would be classified as _____.
capitalism
communism
socialism
a mixed economic system
Which of the following reflects specialization?
A neurosurgeon is a doctor for brains.
A vet advertises that he can treat any type of animal
A writer both edits and markets her own book
A restaurant buffet offers both American and international foods
In my country my job is the same one that my family has done over the past 200 years.
Traditional
Command
Market
Mixed
In my country, central planners decide when we should expand old factories and build new ones.
Traditional
Command
Market
Mixed
There are four types of economic systems. Most economies are _____.
Traditional
Command
Market
Mixed
Based on the passage, East Germany's government planned to transform its economy from: Click the magnifying glass for a better view.
Traditional to mixed
Command to traditional
Market to mixed
Command to mixed
_____________ is the incentive for entrepreneurs to start a business despite the risks.
Pride
Wealth
Profit Motive
Being an employer
What does government provide with the revenue it takes in from taxes?
Headaches
Public goods and services
More Congressmen
Greater control of the media
In a free market, what two concepts come together to self-regulate the market?
Competition and self-interest
Competition and Sovereignty
Self-Interest and Profit
Self-Interest and Specialization
Which two terms are largely linked with command economies?
Capitalism and laissez faire
Self-interest and competition
Socialism and communism
Incentive and innovation
What is the name of the force that encourages people and organizations to improve their material well-being from economic activities?
Market Failure
Profit Motive
Positive Externality
Free Rider
How are entrepreneurs important within the economy?
(more than one answer)
They are also consumers
They provide jobs
They give out free benefits
They make a ton of money to offset the poorer consumers
What are the three questions that are answered by the type of economic a society has?
What will be produced?
How should it be produced?
Who will have access to the goods/services produced?
Where will goods/services be produced?
