Chapter 2

Question 0

3 key economic key questions:

Answer 0

• What goods and services should be produced?
• How should these goods and services be produced?
• Who consumes these goods and services?

Question 1

_____ _____: the method used by a society to produce and distribute goods and services

Answer 1

Economic system

Question 2

_____ _____ are the income people receive for supplying factors of production

Answer 2

Factor payments

Question 3

Economic efficiency is all about making the most of _____

Answer 3

Resources

Question 4

Freedom from government intervention in the production and distribution of goods and services is _____ _____

Answer 4

Economic freedom

Question 5

Economic equity refers to fair distribution of _____

Answer 5

Wealth

Question 6

Economic growth and innovation leads to a higher _____ __ _____

Answer 6

Standard of living

Question 7

All nations have some sort of _____ _____

Answer 7

Economic goals

Question 8

A _____ _____ is an economic system that relies on habit, custom, or ritual to decide questions of production and consumption.

Answer 8

Traditional economy

Question 9

In a _____ _____ economic decisions are made by individuals and are based on exchange, or trade.

Answer 9

Market economy

Question 10

_____ _____ are ran by solely the government

Answer 10

Command economies

Question 11

_____ _____ are market-based systems

Answer 11

Mixed economies

Question 12

A _____ is a forum for buyers and sellers to exchange products

Answer 12

Market

Question 13

We are not _____-_____

Answer 13

self-sufficient

Question 14

People have _____

Answer 14

specializations

Question 15

A _____ _____ is one that is based on voluntary exchanges

Answer 15

Free market

Question 16

_____ own the factors of production and are the consumers of goods and services

Answer 16

Households

Question 17

A _____ is and organization that uses resources to produce a product.

Answer 17

Firm

Question 18

When firms purchase the factors of production from households it is called the _____ _____

Answer 18

Factor market

Question 19

The _____ _____ is where the households purchase the goods and services from the firms

Answer 19

Product market

Question 20

Adam Smith first noted that people operate in the market considering only their _____ _____

Answer 20

Self interest

Question 21

We look for _____ in the market.

•Monetary vs. nonmonetary

Answer 21

Incentives

Question 22

Incentives are at the heart of _____ in the market

Answer 22

Competition

Question 23

Adam Smith referred to the self-regulating nature of the market as…

Answer 23

The invisible hand

Question 24

_____ _____ is the idea that consumers decide what gets produced

Answer 24

Consumer sovereignty

Question 25

_____ _____ economies oppose private property, free market pricing, competition, and consumer choice

Answer 25

Centrally planned

Question 26

In this economy, the government owns the _____ and _____

Answer 26

Land, capital

Question 27

Consumer choice and competition is completely _____ from the system.

Answer 27

Absent

Question 28

_____ is a belief that democratic means should be used to distribute wealth equally throughout society

Answer 28

Socialism

Question 29

_____ a centrally planned economy with all economic and political power resting in the hands of the central government

Answer 29

Communism

Question 30

Socialist countries can still allow room for democracy, while communist countries are _____.

Answer 30

authoritarian

Question 31

Communist governments typically do not _____ individual freedom and impose strict regulations on their citizens

Answer 31

Allow

Question 32

Soviet Union

Answer 32

1917-1991

Question 33

Soviet planners were most _____ with building national power and prestige in the international community

Answer 33

Concerned

Question 34

_____ were large farms leased from the state to groups of peasant farmers

Answer 34

Collectives

Question 35

The Soviet government had _____ that the farmers had to meet

Answer 35

Quotas

Question 36

Soviet factories were also _____-_____

Answer 36

State-owned

Question 37

_____ _____ requires a large capital investment and that produces items for other industries

Answer 37

Heavy industry

Question 38

Jobs and wages were set by the _____

Answer 38

Government

Question 39

_____ was illegal in the Soviet Union.

Answer 39

Entrepreneurship

Question 40

_____ _____ states that government generally should not intervene in the marketplace

Answer 40

Laissez faire

Question 41

_____ _____ is property that is owned by individuals or companies, not by the government or people as a whole.

Answer 41

Private property

Question 42

_____ _____ is an economic system characterized by private or corporate ownership of capital goods

Answer 42

Free enterprise

Question 43

In order to make this transition, state firms must be _____

Answer 43

Privatized