AP Quiz Flashcards
What is this Economic System?
Oldest type of economic system and conducts economic activity based on practices of past generations
Traditional Economy
What is this Economic System?
Many of their decisions are guided by their values
(respect for elders, social harmony, etc.) and their
religion.
Traditional Economy
What is this Economic System?
Production is usually for subsistence and rarely to produce
a surplus.
Big families usually have an economic advantage by having
more children.
Change and innovation is usually resisted in order to
preserve the culture.
Trade is usually done through barter.
Traditional Economy
What is this Economic System?
The government manages the economy from top to bottom and
makes all of the economic decisions like an army.
It works with the assumption that the government knows
everything the people need and how to satisfy them.
For the government, the welfare of the state is more important
than the welfare of individuals.
This is usually found in dictatorships or totalitarian regimes
Command Economy
What is this Economic System?
Can easily make drastic decisions in
relation to production but workers usually lack motivation to
be productive.
There is no freedom to choose. Whatever the government
decides to produce, the citizens make do with that. However,
citizens are assured of equal access to goods and services.
The state controls all factors of production and there is no
private ownership or entrepreneurship.
Command Economy
Give me an example of present day command economies
North Korea and Cuba
What is this Economic System?
Individuals are free to make their own economic decisions.
Self-interest and the pursuit of happiness is what drives
production and consumption, and competition drives
innovation.
Resources are allocated based on the interaction between
buyers and sellers.
Economic resources are owned by the private sector.
Market Economy
What is this Ecomomic System?
Government intervention is limited only.
Instability where prices
could shoot up sometimes. There is also unequal
distribution of wealth.
It also fails to take into account the production of public
goods as the private sector rarely provides those. It also
does not address adverse effects of production (negative
externalities).
Market
What are all the political-economic theories in the modern era?
Capitalism, Socialism, Communism, Fascism
What is capitalism?
It is a type of free economy that is based on private ownership of resources and factors of production, where the government has no role except to maintain peace and order.
What would freedom of enterprise cause in Capitalism?
It would create intense competition among businesses, leading to
constantly improving products.
What economic theory does this come from?
There are many businesses, none would be
capable of manipulating the prices and supply of
commodities. Consumers can buy the best products
at the lowest possible price.
Capitalism
Which of the Economic Theories has the most competitive market?
Capitalism
Which of the Economic Theories give power to consumers in controlling the market?
Capitalism
What economic theory does this come from?
It advocates State ownership of factors of production.
This stems from the view that capitalism is
divisive and unfair.
Socialism
According to socialists, what part of capitalism is unfair?
It is the fact that capitalism creates a struggle between capitalists and workers and exploits workers by forcing them to work hard and give them little pay.
What economic theory does this come from?
Its goal is a perfect society called a utopia, where the full
potential of people is harnessed.
Socialism
