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
What are the 2 main forms of Socialism?
Reform and Revolutionary
What is reform socialism?
Gradual transformation of the economy through education and peaceful change. Individual liberty and democracy are protected.
What is revolutionary socialism?
Predicts a violent overthrow of the capitalist system and the victory of the workers. It requires a totalitarian State where individual, economic, and political freedom is given up in favor of the State. This later on would become known as an extreme form of socialism called communism.
What economic theory does this come from?
This is the extreme form of socialism.
The State is more important than the people, leading to
the devaluing of human life and people being sacrificed
for the sake of the State.
Communism
How would the officials of the communist party use State power?
To jail or kill political opponents.
What economic theory does this come from?
Establishes an authoritarian government
which deprives the people of their freedom.
Allies with capitalists to ensure that
industries operate with the government’s economic and political goals in mind.
Fascism
In this economic theory, nationalism is the supreme value, often promoting national or racial pride to the people.
Fascism
What economic theory is both a democracy and a market economy?
Capitalism
What economic theory is both a democracy and a command economy?
Socialism
What economic theory is both a command economy and a dictatorship?
Communism
What economic theory is both a market economy and a dictatorship?
Fascism
What are examples of leaders of a communism?
Mao zedong and Joseph Stallin
What are examples of leaders of a facism?
Ferdinand Marcos and Adolf Hitler
What economic theory does this come from?
Any group or individual that stands in the way is targeted and
eliminated by the government.
Fascism
What are all the classifications of economic systems?
Pure Market Capitalist, Advanced Market Capitalist, Market Socialist, Command Socialist, Welfare State Economy
What is a Pure Market Capitalist Economy?
Currently, this economic system does not exist. All
governments in different ways intervene in the
economy through taxes, economic policies,
granting of licenses, price control in emergency
situations, and operation of major industries and
utilities.
What is this classification of economic system?
freedom of enterprise and competition
private ownership of resources and means of production
economic production is for profit not survival
maximize us of products and resources
prices are based on interaction of buyers and sellers
government intervenes through taxes, economic policies, granting licenses, price control in emergency, and operation of major industries and utilities
Pure Market Capitalist
How much of Pure Market Capitalist is Market and how much is Command Economy?
100% market 0% command
What is this classification of economic system?
Less rigid than capitalism
allows government intervention to stabilize economy
Advanced Market Capitalist
How much of Advanced Market Capitalist is Market and how much is Command Economy?
80-90% market 10-20% command
What is this classification of economic system?
It combines the features of capitalism and socialism.
Free enterprise is possible, but only for small businesses. The
major industries are still owned and controlled by the State.
E.g. the People’s Republic of China remains communist but
has adopted market reforms in its economy. It welcomes
foreign investors and is now one of the top producers of
industrial and consumer goods.
Market Socialist
How much of Market Socialist is Market and how much is Command Economy?
50% market 50% command
What is this classification of economic system
It is based on state ownership of resources and means of
production. A central planning board makes ALL
economic decisions.
Eg. North Korea, the USSR
Command Socialist
How much of Command Socialist is Market and how much is Command Economy?
0% market 100% command
What is this classification of economic system
democratic socialism
private and public ownership of resources
heavy taxes on citizens in order to fund state welfare programs like free education, healthcare, pension, housing, etc.
tries to offset the tendency of capitalist economies of wealth being
concentrated in the hands of a few people only
Most European Countries
Welfare State Economy
How much of Welfare State Economy is Market and how much is Command Economy?
60-70% market 30-40% command
