Unit 2

Question 1

Traditional economy

Answer 1

Economic activities stem from customs
Roles defined by ancestors
Hunters farming

Question 2

Economic systems

Answer 2

The way a society uses resources to satisfy its people’s wants

Question 3

Command economy

Answer 3

System where government has all control
Centrally planned economy
Influenced by Karl Marx
Ex. North Korea

Question 4

Socialism

Answer 4

Government owns major industries but also allows for private ownership

Question 5

Market economy

Answer 5

Producers and consumers drive economy

Question 6

Consumer sovereignty

Answer 6

Consumers control what gets produced

Question 7

Capitalism

Answer 7

System based on the private ownership of the factors of production

Question 8

Economic freedom

Answer 8

Producers and consumers have the freedom to choose what to buy, whom to hire, and what to produce

Question 9

Profit motive

Answer 9

Driving force where individuals promise self interest

Question 10

Competition

Answer 10

Sellers acting independently to attract consumers by offering best deal

Question 11

Private property

Answer 11

Right to control possessions as you wish

Question 12

Voluntary exchange in markets

Answer 12

Buyer and sellers willingly engage in transactions

Question 13

Limited government

Answer 13

All real world market economies have some degree of government involvement