SS: Economics Ch. 2, Lesson 1: The Three Economic Questions

The Three Key Economic Question are:

What goods and services should be produced? How should these goods and services be produced? Who consumes these goods and services?

Which of the following is a condition that most people would not expect the safety net of the government to provide for?

Low income.

Which best describes a traditional economy?

A small, close community that avoids change and new technology.

Pure market economies always _________.

Base economic decisions based on exchange, or trade.

How does each society determine who will consume what is produced?

Based on the amount of factor payments.

In which type of economy does only the government make economic decisions?

Centrally Planned Economy

Market Economy

Economic system in which decisions on production and consumption of goods and services are based on voluntary exchange in markets.

Centrally Planned Economy

Economic system in which the central government makes all decisions on the production and consumption of goods and services.

Command Economy

Economic system in which the central government makes all decisions on the production and consumption of goods and services.

Mixed Economy

Economic system that combines the free market with limited government involvement.

Traditional Economy

Economic system that relies on habit, custom, or ritual to decide questions of production and consumption of goods and services.

Why aren't all people paid the same amount in factor payments for the resources they provide?

Factor payments differ because societies place different values on resources and products.

Safety Net

Government programs that protect people experiencing unfavorable economic conditions.

To improve it's standard of living, a nation's economy must ________.

Grow through innovation.

Which of the following is not a key economic question?

How should it be ensured that goods and services are paid for?

Factor Payments

Income people receive for supplying factors of production: land, labor, or capital.

How does a society answer the three economic questions about the production and consumption of goods and services?

Its answer is based on the importance it attaches to various economic goals and societal values.

Standard of Living

Level of economic prosperity.

Patriotism

The love of one's country; the passion that inspires a person to serve his or her country.

What is the function of an economic system?

To produce and distribute goods and services.