Economic Systems Review

In a command economy, economic decisions are made by individuals. False

The kind of system in which the individuals own and control the factors of production is a command economy. False

In a system of pure competition, the role of the government is to regulate prices. False

A free enterprise system is based on individual initiative. True

Economic equity refers to fair play in the economy. True

In a laissez-faire system, the government does not interfere in the economy. True

Adam Smith’s “invisible hand” refers to the role of the ______. Market

A laissez-faire system is one in which government inference in the economy is __________. Minimal

A major characteristic of a pure market economy is _________. Competition Little or no government Freedom of choice Freedom of enterprise Private Property Profit Incentive

Another term for a capitalist system is a _______ economy. Market

The word “equity” means _________. Fairness

Name a country that is a prime example of a command economy. North Korea China Nazi Germany

In a capitalist system, most property is ___________. Private Property

It is easier to start a business in a ________ system. Market Free Enterprise Capitalist

Which economies answer all three of the basic economic questions?

What type of economic system is described in this passage? “So long as mankind lived by raising crops and herding animals, there was not much need for measuring small units of time. The seasons were all important—to know when to expect the rain, the snow, the sun, the cold. Why bother with hours and minutes? Daylight was the only important time, the only time when men could work.”   Source: Daniel J. Boorstin’s The Discoverers: A History of Man’s Search to Know His World and Himself, 1985. Traditional

What is rivalry among producers? Competition

What is the desire to make money? Profit Incentive

What economic system depends on decisions made by the government? Command

What system states that government should interfere minimally? Laissez-faire

What is the expansion of the economy? Economic Growth

In which economic system is it easiest to start your own business? Market

What is another term for a capitalist system? Market

Traditions, Customs, and beliefs What answers the three basic economic questions in a traditional system? Traditions, Customs, and beliefs

What is the material well-being of an individual, group, or nation? Standard of Living

What is a freely chosen activity between buyers and sellers of goods and services? Market