Chapter 2 Test Flashcards
(21 cards)
Name the 4 economic systems/ economies in the world
1) tradicional economy
2) command economy
3) market economy
4) mixed economy
Traditional economy
An economic system where production, investment, prices and incomes are determined by rituals, habits, customs, and beliefs
Name 1 advantage of a traditional economy
Everyone knows what, how and for whom to produce
Name 2 disadvantages of a traditional economy
1) it tends to discourage new ideas and new ways of doing things
2) creates a lack of progress
Command economy
An economic system in which production, investment, prices and incomes are determined by a central authority (example- king, dictator, state, government)
Who decides what, how and for whom to produce in a command economy
A central authority
What is a modern, liberal version of the command economy?
Socialism
Socialism
An economic and political system in which the government owns some, but not all the factors of production and makes most/all of the economic decisions (examples- North Korea, Cuba, Venezuela and Vietnam)
Name 2 advantages of a command economy
1) it can change direction drastically
2) allows people to receive some services they otherwise may not be able to afford (healthcare)
Name 4 disadvantages of a command economy
1) leaders provide for themselves at the expense of the general population
2) the loss of individual freedom to choose
3) a low quality and quantity of goods
4) tax rates are high
Market economy
An economic system in which production, investment, prices and incomes are determined and controlled by buyers and sellers (examples- USA, Australia, Canada, Great Britain)
Who determines what, how and for whom to produce in a market economy
Consumers
What is a market economy based on?
Capitalism
Which economy is the most powerful engine generating wealth the world has ever seen
Market economy
Name 4 advantages of a market economy
1) individual freedom
2) adjust gradually to change over time
3) small degree of government interference
4) provides a wide variety of goods and services
Name 2 disadvantages of a market economy
1) doesn’t provide for everybody
2) can have a high degree of uncertainty
Mixed economy
An economic system blending elements of market, command, and traditional economies (example- Western Hemisphere)
Name the advantage of a mixed economy
Can take the advantages of the other economies
Name the disadvantage of a mixed economy
Can take the disadvantages of the other economies
Communism
Karl Marx came up with an ideological and social political movement whose aim is to set up a better version of society
Communism would be based on the ____ _____ of the factors of production and would not rely on social classes
Common ownership
