Chapter 2 Quiz Review Economics

The economic and political system in which factors of production are collectively owned and directed by the state; based on a theoretically classless society in which everyone works for the common good.

Communism

What are the Three Basic Economic Questions?

- What to produce? - How to produce? - For whom to produce?

Which question is most important and why?

For whom, because you must have a market for your product.

An economic and political system where the government owns some, but not all of the factors of production (land, labor, capital, and entrepreneurship).

Socialism

The economic system in which the basic economic questions are tradition and habit.

Traditional

A place where buyers and sellers meet to interact A place where buyers and sellers meet to interact. Here prices and quantities of goods are determined. Market

A strength of this economic system is that it can change directions fast. Command Economy

Weaknesses of this system include deciding for whom to produce, market failure, and the fact that the sick, young, and old have a difficult time. Market Economy

A strength of this economic system is that it changes directions gradually . Market Economy

A strength of this economic system is that there is little uncertainty over the what, how and for whom questions. Traditional Economy

What are the three basic economic systems?

Traditional, Command, & Market

Forced common ownership of the factors of production Forced common ownership of the factors of production. (used in the former Soviet Union) Collectivization

Strengths of this economic system include small government interference, decentralization of decision making, and small government interference. Command Economy

The economic system in which the basic economic questions are answered by government planners.

A weakness of this economic system is that it doesn’t meet the needs and wants of individuals, stifles new ideas, requires a large central bureaucracy, and isn’t flexible with everyday issues. Command Economy

A weakness of this economic system is that it discourages new ideas and has a lower standard of living. Traditional Economy

Command Economy

The economic system that has some combination of traditional, command, and market economies.

Mixed Economy

Production process requiring large amounts of capital in relation to labor. Capital-Intensive

Economic system in which individuals own the factors of production and answer the three basic questions.

A market economy

Economic system in which private individuals own and use the factors of production to generate profits.

Capitalism

Entrepreneurship, Capital, Land, and Labor.

The Four Economic Resources or Factors of Production.

Shift of an economy, or part of an economy, from private to public ownership. Nationalization

What is the “Black Market?”

Market where goods and services are sold illegally.

GDP on a per person basis and can be expressed in dollars. What is GDP per-capita? GDP on a per person basis and can be expressed in dollars.

An organized way a society provides for the wants and needs of its people. Economic Systems

The number of people per square mile of land. Population Density

What is the worst period of economics decline in the U.S. called? The Great Depression