Types Of Economy Intro

Question 1

What happens in a free market to control the price mechanism

Answer 1

The invisible hand exists which is basically where the price mechanism and fundamentals of economics control the overall price mechanism and the placing of where the it is whether at equilibrium

Question 2

Free market economies

Answer 2

The price mechanism allocates all resources
Eg: USA , Hong Kong

Question 3

Command economy

Answer 3

Government allocates all resources
Eg: North Korea and Cuba

Question 4

Mixed economy

Answer 4

The government and free market allocate all resources

Question 5

Adam smith?

Answer 5

Specialisation and division of labour. And was a fan of free markets

Question 6

What were Adam smiths theories

Answer 6

Supported free markets
Invisible hand is efficient in allocating resources
The gov should leave markets alone unless there is gov failure.

Question 7

Why is a free market onto effective in the long term

Answer 7

This is because it will mean that capitalism occurs and this is when the rich owners own all of the capital meaning that everyone else has to work hard and slave for the owners and this can lead to terrible inequality and unfairness and unjust rules meaning that workers will be exploited.

Question 8

Give some data that argues against the free market

Answer 8

At least 50 present of the global wealth is held by 1 % of the rich

Question 9

What were Karl marxes belief

Answer 9

Command economy
Hated capitalism