Economic Systems

Question 1

there are two types of economics in today’s society:

Answer 1

microeconomics (MIE)

macroeconomics (MAE)

Question 2

______ is the study of individuals, families, and businesses in the economy

Answer 2

microeconomics

Question 3

______ is the study of the economy as a whole and is concerned with large scaled economic activity

Answer 3

macroeconomics

Question 4

______ studies behavior as it is

Answer 4

positive economics

Question 5

______ involves judgements of what economic behaviors ought to be

Answer 5

normative economics

Question 6

there are three basic types of economic systems:

Answer 6

traditional economies
command economies
market economies

Question 7

A ______ is an economic system in which families, clans, or tribes make economics decisions based on customs and beliefs that have been handed down from generation to generation

Answer 7

traditional economy

Question 8

A ______, the government decides what goods and services will be produced , how they will be produced, and how they will be distributed

Answer 8

command economy

Question 9

A ______, is based on an individual choice, not government directives

Answer 9

market economy

Question 10

In a market economy, ______ and ______ drive the economy

Answer 10

consumers and producers

Question 11

no other economist has had as much influence as ______

Answer 11

Adam Smith

Question 12

Smith was born in ______, in 1723 and studied, and later taught, literature, logic, and moral philosophy

Answer 12

Scotland

Question 13

in the ______, Smith challenged the ideas of mercantilism being economically sound

Answer 13

Wealth of Nations

Question 14

______ is a system by which the government of the homeland controlled trade with its colonies

Answer 14

mercantilism

Question 15

a nation would be wealthier if it engaged in ______

Answer 15

free trade

Question 16

Smith reasoned that people behave in ways that satisfy their ______

Answer 16

economic selfinterest

Question 17

the publisher of The Wealth of Nations stated that a ______ guides the marketplace

Answer 17

“invisible hand”

Question 18

the invisible hand as well as other principles outlined in the Wealth of Nations became the foundation of modern ______

Answer 18

economic theory

Question 19

advantages of traditional economies

Answer 19

• clearly answers the three economic questions
• produce what best ensures its survival
• little disagreement over economic goals and rules

Question 20

disadvantages of traditional economies

Answer 20

• resist change
• less productive
• very low standard of living

Question 21

a system in which the society’s leaders, usually members of the central government, make all economic decisions is called a ______

Answer 21

centrally planned economy

Question 22

modern societies that have adopted command economies have done so largely because of the influence of ______

Answer 22

Karl Marx

Question 23

Marx predicted that in time, the workers would overthrow this system and transfer ownership of the factories to ______

Answer 23

public hands

Question 24

______ is an economic system in which the government owns some or all of the factors of production

Answer 24

socialism

Question 25

______ is an economic system in which the government owns all the factors of production and there is little or no political freedom

Answer 25

communism

Question 26

typically communism will become ______

Answer 26

authoritarian

Question 27

an ______ requires absolute obedience to those in power

Answer 27

authoritarian system

Question 28

______ is established through the democratic political process rather than through the violent overthrow of the government

Answer 28

democratic socialism

Question 29

Marx was born in what is now ______ in ____ and grew up in middle-class comfort

Answer 29

Germany 1818

Question 30

he would be exiled from his homeland for becoming involved in ______

Answer 30

radical politics

Question 31

during his travels he met ______, the son of a factory worker

Answer 31

Fredrick Engels

Question 32

Marx concluded that the ______ had created a system of wage slavery

Answer 32

Industrial Revolution

Question 33

Marx, assisted by Engels, laid out ideas of worker overthrow in ______

Answer 33

The Communist Manifesto (1848)

Question 34

What country still had an economy with mostly command elements?

Answer 34

North Korea

Question 35

self-interested behavior is behind two features of a market economy:

Answer 35

private property rights | market

Question 36

______ are the rights of individuals and groups to own businesses and resources

Answer 36

private property rights

Question 37

the ______ is any place where people buy and sell goods and services

Answer 37

market

Question 38

______ is vital to any single sale or exchange

Answer 38

clear ownership

Question 39

the principle that the government should not interfere in the economy is called ______

Answer 39

laissez faire

Question 40

the concept of laissez faire is often paired with ______

Answer 40

capitalism

Question 41

______ is an economic system that is based on private ownership of the factors of production

Answer 41

capitalism

Question 42

______, the foundation of market economies, operates on the belief that, on their own, producers will create the goods and services that consumers demand

Answer 42

capitalism

Question 43

Laissez faire is a ______ economy in its pure form

Answer 43

market

Question 44

a ______ is a trade in which both traders believe that what they are getting is worth more than what they are giving up

Answer 44

voluntary exchange

Question 45

______ guides voluntary exchange

Answer 45

self-interest

Question 46

profit is considered a ______ from a business transaction

Answer 46

financial growth

Question 47

______ is the effort of two or more people, acting independently, to get the business of others by offering the best deal

Answer 47

competition

Question 48

______ is the idea that because consumers are free to purchase what they want and refuse products they do not, they have the ultimate control over what is produced

Answer 48

consumer sovereignty

Question 49

______ acts as a control on self-interested behavior, guiding the market toward a balance between higher value and lower prices

Answer 49

competition

Question 50

______ is a situation in which people concentrate their efforts in the areas in which they have an advantage

Answer 50

specialization

Question 51

_____ removes the need for households to be self-sufficient, and ______ allow households to trade for what they need

Answer 51

specialization | markets

Question 52

the ______ is a tool that economists use to understand how market economies operate

Answer 52

circular flow model

Question 53

the model represents the two key economic decision makers in a market economy

Answer 53

households | businesses

Question 54

the market for goods and services is called the ______

Answer 54

product market

Question 55

the product market isn't a place as much as it is a ______

Answer 55

set of activities

Question 56

the suppliers of the product market are ______

Answer 56

businesses

Question 57

the ______ is the market for the factors of production

Answer 57

factor market

Question 58

______ own all the factors of production

Answer 58

individuals

Question 59

in the factory market, ______ are the consumers and ______ are the producers

Answer 59

businesses | individuals

Question 60

Advantages of market economies:

Answer 60

- economic and political freedom - profit - incentives - competition

Question 61

______ is one of the chief advantages of a market economy

Answer 61

freedom

Question 62

the ______, a key feature of the market economy, ensures that resources will be allocated efficiently, since inefficiencies would result in lower products

Answer 62

profit motive

Question 63

in a ______ economy, the economic good of the individual is the primary focus

Answer 63

pure market

Question 64

a ______ economy is the most common type of economic system today

Answer 64

mixed

Question 65

a ______ is an economy that has elements of traditional, command, and market economies

Answer 65

mixed economy

Question 66

What type of economy dominates in the U.S.?

Answer 66

Market Economy

Question 67

What country tried to find a middle ground between socialism and capitalism?

Answer 67

France

Question 68

Swedish citizens receive "______" social benefits

Answer 68

cradle to grave

Question 69

more recently, many economies have moved away from command systems to ______ systems

Answer 69

market

Question 70

to ______ means to change private ownership to government or public ownership

Answer 70

nationalize

Question 71

to ______ means to change from government or public ownership to private ownership

Answer 71

privatize

Question 72

one way to help privatize an industry is to open it up to ______

Answer 72

foreign investors

Question 73

the ______ refers to all the economic interactions that cross international boundaries

Answer 73

global economy