Chapter 1

Question 1

Command Economy

Answer 1

an economy where economic decisions are passed down from government authority and where the government owns the resources

Question 2

Market Economy

Answer 2

an economy where economic decisions are decentralized, private individuals own resources, and businesses supply goods and services based on demand

Question 3

Monetary policy

Answer 3

policy that involves altering the level of interest rates, the availability of credit in the economy, and the extent of borrowing

Question 4

Scarcity

Answer 4

when human wants for goods and services exceed the available supply

Question 5

Specialization

Answer 5

when workers or firms focus on particular tasks for which they are well-suited within the overall production process

Question 6

Traditional Economy

Answer 6

typically an agricultural economy where things are done the same as they have always been done