Chapter 2

Question 1

economic system in which the allocation of scarce resources, and other
economic activity, is the result of ritual, habit, or custom.

Answer 1

Traditional economy

Question 2

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

Answer 2

economic system

Question 3

economic system characterized by a central authority that makes the most of
the major economic decisions.

Answer 3

command economy

Question 4

economic system in which government owns some factors of production and has a role in
determining what and how goods are produced.

Answer 4

socialism

Question 5

economic system in which supply, demand, and the price system help people
allocate resources and make the WHAt, HOW, and FOR WHOM to produce decisions.

Answer 5

market economy

Question 6

economic system in which private citizens own and use the factors of production in
order to generate profits.

Answer 6

capitalism

Question 7

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

Answer 7

mixed economies

Question 8

worst period of economic decline in U.S. history, lasting from approximately
1929 to 1939.

Answer 8

great depression

Question 9

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

Answer 9

comunism

Question 10

gross domestic product on a per person basis; can be expressed in current or
constant dollars.

Answer 10

GDP per capita

Question 11

conversion of state-owned factories and other property to private ownership.

Answer 11

privatization

Question 12

certificates that could be used to purchase government-owned property during
privatization.

Answer 12

vouchers

Question 13

forced common ownership of factors of production; used in the former Soviet
Union in agriculture and manufacturing.

Answer 13

collectivization

Question 14

China’s second Five-Year Plan, begun in 1958, which forced collectivization of
agriculture and rapid industrialization

Answer 14

great leap forward

Question 15

independent Polish labor union founded in 1980 by Lech Walesa.

Answer 15

solidarity

Question 16

shift of an economy, or party of an economy, from private ownership to
government ownership.

Answer 16

nationalization

Question 17

market in which goods and services are sold illegally.

Answer 17

black market

Question 18

number of people per square mile of land area

Answer 18

population density

Question 19

Characteristics of Traditional economy

Answer 19

1. agriculture
2. family/tribe oriented

Question 20

Characteristics of command economy

Answer 20

1. government control
2. limited choices for consumers

Question 21

characteristics of market economy

Answer 21

1. freedom of choice
2. competition

Question 22

advantages of traditional economy

Answer 22

less economic destruction, everyone knows what to do

Question 23

advantages of command economy

Answer 23

price stability, full employment potential

Question 24

advantages of market economy

Answer 24

more profitable and more decisions

Question 25

why do mix economies exist

Answer 25

none of them are perfectly one, benefit of different ones

Question 26

people who benefit from mixed economies

Answer 26

the lower class people

Question 27

The economies of Chile and South Korea

Answer 27

South Korea economy is greater, better technology, while Chile gets the medal, makes the products and sells them back to South Korea