econ systems

Question 1

collectivization

Answer 1

soviet policy where the peasantry were forced to give uo their individual farms and join large collective farms

Question 2

dekulkization

Answer 2

soviet campaign of political repressions, including arrests, deportations, or executions of millions of kulaks

Question 3

three types of economic systems

Answer 3

centrally planned (command)economy
free market economy
mixed economy

Question 4

command economy

Answer 4

government determines what goods should be produced, how much should be produced and the price at which the goods are offered for sale
- powerful central planners make economic decisions
- the individual citizen must defer to the leaders

Question 5

command economy pros

Answer 5

speed/unity
less inequality
low unemployment

Question 6

cons of command econoy

Answer 6

less productive (less incentives)
no competition stifles innovation
inefficiency ( knowledge problem)
lack of property rights (tragedy of commons)
less economic freedom/mobility
less wealth

Question 7

market economy

Answer 7

individuals make the economic decisions
government has little to say in what is produced, sold, or consumed
relies on “the market” to provide enough resources
private property is protected by government

Question 8

market economy pros

Answer 8

increased productivity
consumers and businesses drive supply and demand
competition encourages efficiency and innovation
innovation is rewarded with profits
businesses invest in one another
more economic freedom/ mobility and wealth

Question 9

cons of markey economy

Answer 9

negative externalities
anti-competition practices
public goods (safety, infrastructure, etc)
can deepen wealth inequality
difficult to coordinate society-wide responses to events

Question 10

mixed economies

Answer 10

a system that combines characteristics of market and command economies
varies widely from country to country
many countries want govt to step in when market operates in ways that society finds unacceptable
and for public works projects

Question 11

tragedy oof the commons

Answer 11

a social and political problem in which each individual is incentivized to act in a way that will ultimately be harmful to all individuals

Question 12

what is the government’s role in a market economy

Answer 12

to prevent unemployment and inflation at the same time
and increase gdp
if govt focuses on preventing infltion and slows down the economy, unemployment increases
if govt focuses on limiting unemployment and overheats the economy, inflation increases

Question 13

inflation

Answer 13

general increase in the prices of goods and services in the eonomy over time that corresponds to the decreaes in value of money

Question 14

gross domestic product

Answer 14

the total value of everything produced within a country’s borders
when economists talk about the size of the economy, they are refering to gdp

Question 15

fiscal policies

Answer 15

refers to decisions the government makes about spending and collecting taxes and how these policy changes influence the economy

Question 16

expansionary policies

Answer 16

help speed uo the economy or increase economic growth

Question 17

contractionary policues

Answer 17

helps slow down the economy or slow economic growth

Question 18

monetary policy

Answer 18

a central bank’s actions and communications that manage the money supply. central banks use monetary policy to prevent inflation, reduce unemployment, and promote moderate long-term interest rates

Question 19

example of free market

Answer 19

if a society wants computers and peopleare willing to pay high prices then
businesses have the incentive to male computers for profit
this leads to competition
competition means lower prices, better quality, and more product variery

Question 20

why must the government provide public goods and srvices

Answer 20

it is impractical for the free-market to provide these goods becayse there is little opportunity to earn profit
free riders benefit without paying

Question 21

two key characteristics of public goods

Answer 21

nonexcludable and nonrivalrous
^makes it difficult for market producers to sell the good to individual consumers

Question 22

nonexcludable

Answer 22

means that it is costly or impossible for one user to exclude others from using a good
ex: public good applies to everyone/ most people and therefore you can’t be excluded from it

Question 23

nonrivalrous

Answer 23

when one person uses a good, it doesn’t prevent others from using it
ex: public defense applies to everyone so you can’t take it up from someone else

Question 24

externalities

Answer 24

a third person side effect
when there are external benefits or external costs to someone other than the original decision maker
ex: pollution

Question 25

perverse incentives

Answer 25

when people are incentivised to do the opposite of what they are desired to
negative impact