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Flashcards in Chapter 6 Section Reviews Deck (18):
1

What economic system prevailed in Europe from the 1500s to the 1700s?

Mercantilism

2

What was the major economic goal of European countries from the 1500s to the 1700s?

Increase their holdings of gold and silver

3

According to Adam Smith, what were two flaws in mercantilist economic policy?

- Nation would exploit its resources to accumulate gold and silver at the expense of its own people
- The aggressive actions of the mercantilism nation would create enemies

4

According to Adam Smith, why would a laissez-faire economic policy work?

People will seek to meet the needs of others in a way that they would profit themselves

5

The answers to what two questions can determine whether a nation is capitalistic or socialistic?

- Who owns the factors of production?
- Who answers the three economic questions?

6

Complete the following chart of economic systems.

1. Radical Capitalism - Individuals
2. Classic Liberal Capitalism - Individuals but minimal governmental ownership
3. State Capitalism - Individuals but with moderate governmental ownership
4. Individuals - with moderate governmental decision-making
5. Social Democracy - Individuals but government ownership of key industries
6. Government - With minimal decision-making
7. Centralized socialism - The government owns the factors of production and the government answers the questions
8. Communism - all citizens in common

7

Name two economic principles of capitalism supported by Scripture and give a reference for each.

- Private Ownership of property - Acts 5:4, Exodus 20:17
- Principle of individual accountability - Luke 12:47-48

8

Which economic system is closest to Adam Smith’s writings?

Classic Liberal Capitalism

9

Identify the five points of mercantilism.

Exploration, trade, domestic manufacturing, colonization, alliances/treaties

10

What is the full title of Adam Smith’s landmark economic treatise?

Inquiry into the nature and causes of the wealth of nations

11

According to Adam Smith’s philosophy of laissez-faire liberalism, what are the two keys to the economic prosperity of a nation?

Limited government
Personal responsibility

12

What is liberalism according to the classical definition?

Liberty

13

What did Adam Smith declare to be the three functions of government?

To protect its citizens from foreign invasion
To protect the rights from infringement by others
To provide public goods

14

Why is radical capitalism unscriptural?

It denies the legitimacy of government that God ordained

15

What kind of economy does the United States have?

State Capitalism

16

Socialism is marked by the government’s nationalizing which vital industries?

Transportation, Communication, energy, financial markets, health care

17

To an economist, what is meant by the phrases standard of living and real income?

- Standard of living is the measure of the quality life of a country
- Real income is when a person's income can actually buy

18

Identify two potential weaknesses of capitalism.

Love of money
Materialism