Lesson 7

Question 1

What is an economic system?

Answer 1

The way government and businesses work together to provide goods and services to consumers.

Question 2

What are three major economic questions that must be answered by government agencies and businesses?

Answer 2

What goods and services should be produced?
How should these goods and services be produced?
For whom should these goods and services be produced?

Question 3

What is a pure command economy?

Answer 3

A communism or socialism system, the government owns the natural resources, farms, factories, offices, and most businesses.

Question 4

What are some examples of a pure command economy?

Answer 4

China

Question 5

How does a pure command economy address the three major economic questions?

Answer 5

A pure command economy says that the government should decide all three of the major economic questions.

Question 6

What is a pure market economy?

Answer 6

A system run by business owners and individuals with little to no gov intervention

Question 7

What is an example of a pure market economy?

Answer 7

The US

Question 8

How does a pure market economy address the three major economic questions?

Answer 8

What goods and services should be produced?
.. Consumers decide the money they spend
How should these goods and services be produced?
.. Competition among producers, dictates how
For whom should these goods and services be produced?
.. Consumers decide what they want to buy

Question 9

What is a modern mixed economy?

Answer 9

An economic system that combines the elements of both models. Most economies are mixed.

Question 10

What is an example of a modern mixed economy?

Answer 10

Canada

Question 11

How does a modern mixed economy address the three major economic questions?

Answer 11

Modern mixed economy lets people decide with the government intervention.

Question 12

What kind of economic system does Canada have?

Answer 12

Modern mixed economy

Question 13

What is a private sector and what is its purpose? Examples?

Answer 13

Non-government owned and operated businesses.
Primary purpose is to make profit.

EG. Businesses, stores, companies

Question 14

What is a public sector and what is its purpose? Examples?

Answer 14

Different levels of government that provide services to people
Main purpose is not to make profit

EG. Military, TTC, hospitals, community centres

Question 15

Why are five advantages of public ownership?

Answer 15

• Respect for Canadian heritage
• Mostly nonprofit
• Money earned is reinvested for better quality of services
• Ppl are giving a say in how they want the services to be improved
• Essential goods and services are affordable

Question 16

What are P3’s? Name some examples.

Answer 16

• Public-Private Partnership
• When public and private sector use resources to go into business together.
• An idea or business is simply too big for a sector to take on alone.

Question 17

What are advantages of P3’s?

Answer 17

• Less risk
• Higher success rate
• Private and public sectors can take advantage of each others expertise and resources.

Question 18

What is privatization?

Answer 18

When a publicly owned business, is sold to the private sector.

Question 19

When does privatization occur?

Answer 19

• When the private sector can do a better job
• Government loses money by providing services

Question 20

How is privatization accomplished?

Answer 20

• Government stops providing service and expects the private sector to do so
• Government sells its assets to private buyers

Question 21

What is GDP?

Answer 21

• Gross domestic product
• Total value of all goods and services provided by a country in a given period of time
• Inclusion of foreign produce items
• Economy is fluctuating away with about 4 stages
• Each cycle last about 8 to 10 years

Question 22

What are the four faces of the economic cycle?

Answer 22

• Trough: Unemployment is high, hard to make profit, ppl do not want to spend money, very low economic activity
• Growth: Employment increases. Demand grows, more spending, demand is more in stock.
• Peak: Massive increase in employment and wages. Ppl buy tendy “big ticket” items. Interest rates also starts to rise because of inflation.
• Recession: Economy starts to fall, supply is high, demand is low, job loss economy starts to slow leads to depression.

Question 23

How long does one cycle of the economic cycle typically last?

Answer 23

Around 8 to 12 years. Can also happen sooner, if people take more loans and make more purchases on their credit cards.