Economic Systems

Question 1

In a planned economy what does the government make decisions about

Answer 1

Allocation of resources
What and how much will be produced
How much will be invested in technology and infrastructure
Pricing for goods

Question 2

What determines things in a market economy

Answer 2

Supply and demand

Question 3

What does supply and demand determine in a market economy

Answer 3

What is produced
How it is produced
By whom it is produced
Who the consumers are likely to be

Question 4

What is the main concern of a market economy

Answer 4

Profit

Question 5

Who owns the industries in a planned economy

Answer 5

Government

Question 6

What classifies a mixed economy

Answer 6

A mixture of private and government ownership or control

Question 7

What are examples of government intervention in a mixed economy (6)

Answer 7

National rail transport systems
Provincial health care systems
Laws against drug abuse
Protection of human rights
Road infrastructure
National Defence

Question 8

Define an economic system

Answer 8

A means by which societies or governments organise and distribute available resources, services and goods across a geographic region or country
Who owns and controls factors of production

Question 9

List the advantages of a planned economy (4)

Answer 9

Control of prices
Less inequalities
Low unemployment
Government is able to create a stable economy by producing enough goods for everyone

Question 10

List the disadvantages of a planned economy (5)

Answer 10

Limited choice for consumers
Lack of profit motivation
Lack of innovation (Due to lack of competition)
Can't predict consumer behaviour
No motivation to work hard

Question 11

List the advantages of a market economy (5)

Answer 11

Most desired goods are supplied
Large amounts of profit
Production is efficient
Rewards innovation
Workers have motivation

Question 12

List the disadvantages of a market economy (4)

Answer 12

Exploitation of workers
Unemployment is high
Increases gap between rich and poor
Economic and social inequality

Question 13

List the advantages of a mixed economy (4)

Answer 13

All of society has access to education, transportation and communication
Government can intervene in the economy to correct it
Government provides welfare and unemployment benefits to the poor
Government controls activities that could result in negative consequences

Question 14

List the disadvantages of a mixed economy (3)

Answer 14

Risk of corruption
More emphasis on profit at the expense of the welfare of the citizens
Gap between the rich and poor