Economic System:market Economic System

Question 1

What is the government and their responsibilities

Answer 1

Government is a group of people who set policies and make laws to control how a country operates

Responsibilities :1.Make policies and laws
2.order
3 infrastructure
4.Revenue collection
5. Administer the state

Question 2

List the factors of production

Answer 2

Land, capital, labour and entrepreneurship

Question 3

List the remunerations of factors of production

Answer 3

Land=Rent
Labour= Wages/salaries
Capital=interest
Entrepreneurship= Profit.

Question 4

How is the factor of production capital remuneration interest ?

Answer 4

Interest on capital is the fixed return amount that the business owner is eligible to receive from their investment. It is the interest on share capital paid to the investor for the amount they agree to start their business. The partner is eligible to receive the interest for the amount exceeding the total amount employed by them

Question 5

How is the factor of production land remuneration rent?

Answer 5

The first factor of production is natural resources including land, water, minerals,
raw materials and forests. These are scarce and their supply cannot be increased.
It is therefore important not to exploit them.
Users of natural resources are therefore required to pay a price for their use,
especially land.
The price of the land is rent. This is the reward or remuneration the owners of the
land receive for its use.

Question 6

How is the factor of production labor wages/salaries

Answer 6

The second factor of production is labour. If the members of a country’s labour
force are to be of use in the production process, they have to be trained to have
sufficient skills to produce the goods and services required.
When members of the labour force use physical and mental talents to generate
these products and services they receive wages for their efforts.
Therefore wages is the remuneration for labour.

LABOUR
Refers to people who sell their time, effect and skills to be business

Unskilled Labour Semi-Skilled Labour Skilled Labour
People with no Received some training and People who have
Formal training can be employed to do simple studied and have
jobs a formal
qualification

Question 7

How is the factor of production entrepreneurship, profit.

Answer 7

Entrepreneurship, the fourth production factor, is the characteristic of those
individuals in the community who take the lead and accept the risk in bringing
together. In return the entrepreneur receives profit as remuneration and suffers
losses for any errors of judgement.

Question 8

There are 3 economic systems, list them

Answer 8

Market economy/free market system
Planned economy
A mixed economy

Question 9

Go in details of a market economy

Answer 9

In a market eco, production takes place in order to satisfy the wants of the community and to make profit, resources are owned by people or businesses. Capital or money is provided by banks, businesses and individuals. Entrepreneurs decide what to produce according to the wants of the community and they are rewarded with profit. Like Canada and japan. Little intervene of the government like the USA, Germany.

Question 10

Go in details of a planned economy

Answer 10

The government plans, implements and manages all economic activities, the resources used are owned by the government and sets output targets, the government allocates the necessary needed to reach these targets the resources are protects and everyone earns a similar income. Capital is provided by the government, the government decides what work people will do as it is the only employer therefore there are no entrepreneurs as management positions are held by government officials like north Korea and Cuba. generally comes from a country’s need to industrialise their wartime economies rapidly like the former Soviet union.

Question 11

Go in detail of a mixed economy

Answer 11

Elements from both the market Economic system and the planned economic system, the government ensures that there is fair competition in the private sector, the public sector produces those goods and services that the government decides should not be in the public hands, the public and private sector work together to bring about more production. The government designs polices to prevent financial crises and unemployment and provides the basic services and infrastructure to the people.

Question 12

Go in detail of a global economy

Answer 12

The global economy isthe economy made up of all economies in the world and of all humans of the world, which includes all economic activities within and between nations.It is the result of globalization, which creates economic interdependence and integration among countries.The global economy is measured by the aggregate economic output(GDP-Gross domestic products) , movement and influence of all countries.It involves the trade and industry of goods, services, resources, skills, and ideas across national borders

Question 13

Advantages of a market free system

Answer 13

Advantages : everyone has the rights and freedom of choice, the system encourages the production of high quality good, competition encourages business to be efficient by keeping costs down and production high and there is higher gdp, productive tax system and more money spent is spent on social programs

Question 14

Disadvantages of a free market system

Answer 14

There is little government interaction with the community, public good and services such as education, health and housing are not provided which leads to social injustice.
Monopolistic industries may restrict output and drive up prices, there is a large gap between the rich and poor, there is growth instability since it’s controlled by people

Question 15

Advantages and disadvantages of a planned economy

Answer 15

Advantages
No unemployment as the government decides what work people will do
Equal distribution of wealth as everyone earns a similar income
Services and resources are protected and available to all.
Stability because of closed system
Stimulate growth in industry because the government doesn’t have to wait for capital to accumulate before it makes investments in heavy industry. They can direct economic resources to specific areas.

Disadvantages:
No freedom of choice as the government controls the factors of production, social(distribution of wealth comfort) and environmental factors (public services health care), they own everything
Lack of incentive and motivation for workers and managers.
Inflexible systems that cannot adapt to change quickly.

Question 16

Advantages of a global economy

Answer 16

Spread of technology1

Easier and quicker transportation of people and goods1

Increased choice and quality of products23

Increased competition and productivity

Disadvantages
Increased income inequality between and within countries

Cultural homogenization and loss of diversity

Loss of jobs and industries in some regions

Question 17

Definition of an economic system

Answer 17

A system that a country chooses to allocate its resources and distribute its good and resources and aim to eliminate the economic problem e. G. Unemployment and how to meet the endless wants and needs of people and how to produce it and the funds needed to produce it and the distribution of the needs and service/goods to people

Question 18

Market economies originated from

Answer 18

End of feudalism in the market ages. Feudalism system was a system in which a few wealthy land owners controlled the social and economic lives of workers called peasant and allowed them to live in their land in exchange of labor and services. However didn’t work for that long as workers rose up to work on their own freedom and land.

Question 19

What’s affirmative action

Answer 19

South African government has passed laws that make businesses hire people who were left out of the economy once controlled by the apartheid government.

Question 20

Advantages and disadvantages of a mixed economy

Answer 20

Advantages:
Combine government and private business for good economic growth
Government works to encourage the economy to grow in a balanced way so incomes are more equal than in the market economies.
Encourage businesses to make contribution to citizens’ welfare and promote competition for the protection of citizens.

Disadvantages
Economic growth can be limited because the government allocates lots of resources to citizens’ welfare.
Heavy government involvement in the economy through regulation makes them bureaucratic (
-relating to a system of government in which most of the important decisions are taken by state officials rather than by elected representatives)
and open to corruption.

Question 21

How does the world bank determine purchasing power of a currency and how is a national economy measured?

Answer 21

National economies have local currencies that differ in value from each other so the world bank determine purchasing power of a currency based on the GDP.

In monetary terms.

Question 22

What is the gfc?

Answer 22

Global financial crisis refers to the period of extreme stress in global financial markets and banking systems between mid 2007 and early 2009 and the economy in Africa had a downturn which affected economies all over the world.

Question 23

Economies of all the different countries in the world called national economies

Answer 23

As they are all linked together to form a global economy because of globalization.

Question 24

Global economy is a result of

Answer 24

Increase flow of good services and workers and money across borders all over the world known as world economy. Way in which countries’ different economic systems interact.

Question 25

……. Is becoming the world’s strongest economy. Define BRICS

Answer 25

China.
Brazil, Russia, India, China and South Africa which is the world’s strongest emerging economies. Global economy is the opposite of the closed economy that has little to no interaction with other national economies.