Application 3A pg.3-4

Question 1

How is a nation’s pursuit of economic goals determined?

Answer 1

A nation’s pursuit of economic goals is determined by the nature of the national economy.

Question 2

What are the three basic types of economies?

Answer 2

> Traditional economy - decisions regarding economic goals are determined by custom, heredity, and caste; members live like their ancestors with limited opportunity to improve one’s lot in life
Command economy - centralized authority defines economic goals for nation; decisions are made for people by governing authorities
enterprise economy - people are free to make their own economic decisions; however, no economy perfectly fits into one of these categories
mixed economy - hybrid of main three types of economies

Question 3

How is economic growth achieved?

Answer 3

Economic growth is achieved by increasing a nation’s factors of production–natural resources, labor, capital, and entrepreneurship–to produce goods

Question 4

Define full employment

Answer 4

Full employment means that everyone who wants to work has a job
*Economists consider full employment to be reached when 3-4% of nation’s work force is unemployed

Question 5

Describe economic stability

Answer 5

> Economic stability is achieved when inflation rate, unemployment rate, and growth rate of goods and services remain stable from year to year
goal is to avoid uncertainty and disruptions in economy

Question 6

Describe economic efficiency

Answer 6

> economic efficiency is difficult to measure because conditions within economy are complex
it is achieved when demand price and supply price of goods and services, in a given market, are reasonably equal

Question 7

Describe economic security

Answer 7

> one of the main responsibilities of government is to provide economic security for life and property of its citizens
economic policies should create environment where people feel safe and are free to conduct their lives without fear
should provide for defense of country and security within country through enforcement of laws

Question 8

Describe economic freedom

Answer 8

> allows citizens to carry on economic activities of their own volition without coercion from external sources
people are free to buy and sell property, goods, and services, and to profit from them

Question 9

What improves society?

Answer 9

>growth
>full employment
>price stability
>efficiency
>economic equity
>security
>freedom

Question 10

List and describe the two economic policies that generally dominate political scene

Answer 10

> Conservatives - those who seek economic growth and stability, particularly price stability, rather than full employment; those who opt for efficiency over more equal distribution of goods and services
Liberals - those who seek full employment rather than economic growth and stability; those who choose more equal distribution of goods and services over efficiency

Question 11

List and describe the two economic policies that generally dominate political scene

Answer 11

> Conservatives - those who seek economic growth and stability, particularly price stability, rather than full employment; those who opt for efficiency over more equal distribution of goods and services
Liberals - those who seek full employment rather than economic growth and stability; those who choose more equal distribution of goods and services over efficiency