Economic systems part 2

Question 1

Three types of economic systems

Answer 1

1. Market Economy
2. Centrally Planned Economy
3. Mixed Economy

Question 2

Centrally planned economy

Answer 2

• Also known as communism or command economy.
• Decisions are made centrally by the gov’t.
• Gov’t controls all elements of the economy and determines how income is distributed.
• Gov’t provides education, health care, employment and housing to ALL members of society.

Question 3

Private property

Answer 3

• Ownership is restricted
• Citizens may own small household items and furniture
• Governments own all housing and business
• Governments determine who will work in the business (they set the wages) and where they will live

Question 4

Profit

Answer 4

• All profit belongs to the government
• The profit is re-invested into the business or used for social programs such as education and military

Question 5

Competition

Answer 5

• Competition is limited
• Government determines the price, quality, style and amount of goods and services
• Consumers have little choice in products sold

Question 6

Advantages

Answer 6

1. All citizens are assured a minimum standard of living
2. Health, education and other social programs are provided free to all
3. No unemployment
4. Long-term stability

Question 7

Disadvantages

Answer 7

1. Restriction of individual freedoms
2. Little motivation to work hard
3. Large military presence
4. Lack of innovation
5. Corruption