Economic Systems

Question 1

What is something that motivates a person to act in a certain way?

Answer 1

Internal Motives

Question 2

Which economic goals are most important in a traditional economy?

Answer 2

Economic stability and security.

Question 3

In the circular flow model, what is a factor payment?

Answer 3

The income people receive for supplying the factors of production: land, labor, capital, or entrepreneurship.

Question 4

What are the factors of production?

Answer 4

What is used in the production process to produce output.

Question 5

Which term best describes the fact that we depend on others to produce most of the goods and services we want?

Answer 5

Economic interdependence

Question 6

What are 3 questions that every economy must answer?

Answer 6

What will be produced, how will it be produced, and how will the output society produces be distributed?

Question 7

What do you spend when you make a choice?

Answer 7

Opportunity Cost

Question 8

What are the 6 economic goals?

Answer 8

Efficiency, equity, economic freedom, economic growth, security, and stability.

Question 9

Which kind of economy is most common today?

Answer 9

Mixed Economy

Question 10

Why are tradeoffs necessary?

Answer 10

In order to have more of one thing, you have to accept having less of something else

Question 11

Communist governments are closely related to ____________ economic systems

Answer 11

Centrally Planned

Question 12

Why are economies most efficient when they have full employment?

Answer 12

No productive resources are left unused.

Question 13

What is an entrepreneur?

Answer 13

A person who organizes and operates a business or businesses, taking on greater than normal financial risks in order to do so.

Question 14

What does Adam Smith’s idea of an “invisible hand” represent?

Answer 14

The unseen forces that move the free market economy

Question 15

What provides the answers to the 3 basic economic questions for a nation or society?

Answer 15

Economic Systems

Question 16

In a voluntary exchange, why do people give something up?

Answer 16

They expect to be better off after the exchange

Question 17

What is opportunity cost?

Answer 17

The loss of potential gain from other alternatives when one alternative is chosen.

Question 18

What is the circular flow in economics?

Answer 18

A model of the economy in which the major exchanges are represented as flows of money, goods, and services, etc. between economic agents.

Question 19

What is Traditional Economy?

Answer 19

a basic economic system where customs and traditions are the elements that determine the way trade and commerce are performed

Question 20

What is Demand?

Answer 20

the desire, willingness and ability of consumers to pay a certain price for a product or service at a given period.

Question 21

What is Command Economy?

Answer 21

one where the government closely controls the economy

Question 22

What is Capital?

Answer 22

anything that gives its owner value or advantage

Question 23

What is an economic system?

Answer 23

a means by which societies or governments organize and distribute available resources, services, and goods across a geographic region or country

Question 24

What is communism?

Answer 24

an economic ideology that advocates for a classless society in which all property and wealth are communally-owned, instead of by individuals.

Question 25

What is capitalism?

Answer 25

a system for dealing with money and wealth.

Question 26

What is a Mixed Economy?

Answer 26

a system that combines aspects of both capitalism and socialism.

Question 27

What is supply?

Answer 27

the total amount of a given product or service a supplier offers to consumers at a given period and a given price level

Question 28

What is a free enterprise system?

Answer 28

an economic system that provides individuals the opportunity to make their own economic decisions, free of government constraints, and as private profit-potential businesses

Question 29

What is a market economy?

Answer 29

an economic system in which individuals, rather than the state, own most of the resources