Economics 3/4

Who makes decisions concerning the 3 economic questions in a Central Economy? Give Examples. The government decides what to produce, how much to produce, and how much to charge. Ex. Military uniforms would be chose by committee over the production of sweaters

What characterizes an authoritarian government? They exact strict obedience from their citizens and do not allow individuals freedom of thought and action.

Outline the events that led to Russia becoming a communist government. (Soviet Union) revolutions. March- Czar Nicholas was forced from the throne and a provisional government was set up. March- Czar Nicholas was forced from the throne and a provisional government was set up. November- the provisional government was taken over by the Bolsheviks, led by Vladimir Lenin. They renamed themselves communists. November- the provisional government was taken over by the Bolsheviks, led by Vladimir Lenin. They renamed themselves communists.

What were collectives? Large farms leased from the state to groups off peasant farmers. Large farms leased from the state to groups off peasant farmers. Farmers managed operation of the collectives, but they were still required to produce what the government instructed. Farmers managed operation of the collectives, but they were still required to produce what the government instructed.

Explain the relationship between government and the worker Agricultural workers were guaranteed employment and income, and the government established quotas and distribution.

Where was the incentive? Because there was no competition, individuals had few incentives to produce more or better crops.

What was the opportunity cost of the Soviets emphasizing heavy industry? Heavy industry required a large capital investment to produce items used in other industries. The makers of consumer goods and services paid the opp. cost of this concentration of resources. They were stuck with leftover, lower quality resources with which to operate.

1.What did Joseph Stalin do to improve agricultural production?  Joseph Stalin created five year plans to boost production.

Section 4 Modern Economies

What is Laissez-Faire? Doctrine that government generally should not intervene in the marketplace.

What is government’s role in the factor market? The government purchases land, labor, and capital from households In the factor market.

What is government’s role in the product market? Governments purchases goods and services in the product market. They need buildings and office buildings, telephones, computers, and fax machines, for examples. Governments purchases goods and services in the product market. They need buildings and office buildings, telephones, computers, and fax machines, for examples.

What is free enterprise? Economic system characterized by private or corporate ownership of capital goods is called.

Explain how North Korea’s economy operates.. How does China operate? Government owns all the property and all economic output. Government owns all the property and all economic output. State owned industries produced 95 percent of North Korea’s goods. Almost all imports are banned, and production of goods and services by foreign companies is forbidden State owned industries produced 95 percent of North Korea’s goods. Almost all imports are banned, and production of goods and services by foreign companies is forbidden The economy is dominated by government. The economy is dominated by government. 25% of all enterprise are owned by individuals. 25% of all enterprise are owned by individuals.