Economics UNIT 2

Traditional Economy

KEY CHARACTERISTICS based on customs long societal traditions predominance of agriculture strong community network ADVANTAGES everyone knows his or her economic role little uncertainty about what or how to produce DISADVANTAGES little room for new ideas generally low standard of living

Market Economy

KEY CHARACTERISTICS freedom of choice to do business incentives to make profits and beat competition unequal distribution of basic needs some government control ADVANTAGES profit motive makes firms more effective competition keeps prices low low taxes encourage work wide consumer choice DISADVANTAGES no government support for the elderly or for public issues like environmental protection wide income gaps monopolies can develop, discouraging competition

Command Economy

KEY CHARACTERISTICS government control central plan to allocate resources priorities for the production of goods stricter laws to regulate economic activity ADVANTAGES government can force quick economic changes government provides services like health care to everyone DISADVANTAGES limited consumer choice no incentive to work hard

Mixed Market Economy

KEY CHARACTERISTICS ownership of private property greater tax rates on public finances entrepreneurship is encouraged people are free to live, work, and produce whatever they choose ADVANTAGES government provides essential services private sector encouraged to make profits competition lowers prices and increases choices inefficient business actions are controlled DISADVANTAGES heavy taxes reduce incentives to make profits less efficient than market economy excessive controls on business

Which is best classified as a want?

cable

Entrepreneurs who like a challenge and are dedicated to bringing their ideas to life have which qualities?

competitive and inovative

Which is considered a need?

daily meals

Characteristics of Macroeconomics

deals with the overall condition of the economy studies economic growth patterns measures exports and imports for international trade drives public policy and governmental regulations for fair business practices

Cell phone plan

service

Mail delivery

service

What is the consumer's role in the marketplace?

someone who acquires and uses goods and services through economic exchanges

An entrepreneur with the ability to motivate others in a collaborative environment that fosters team goals and work productivity has which qualities?

strong leadership and vision

In which political system does the government own all businesses and the economy?

Communism

*LESSON 9*

*ECONOMIC FUNCTIONS OF GOVERNMENT*

*LESSON 7*

*ECONOMIC SYSTEM*

*LESSON 6*

*ECONOMICS*

Which famous economist wrote The Wealth of Nations?

Adam Smith

What is a characteristic of a need?

A need is something you cannot live without, such as water.

Which is an example of specialization?

A person studies nursing and works in a hospital

Which political theory allows for voluntary cooperation between citizens and the absence of government?

Anarchism

The free enterprise economy is most closely aligned with which system?

Capitalism.

Which government agency provides consumer protection in case of a bank failure and plays a direct role in the US economy?

FDIC

Which characteristics of capitalism drive retail companies to produce better goods and services by the best workers? (Select all that apply.)

Freedom Competition

Books

Good

Which are considered services? (Select all that apply.)

House Cleaning Tailoring a Suit Serving Food

How does business competition impact the consumer?

It helps them because it keeps the price of goods low.

What does the JOBS Act do for companies? (Select all that apply.)

It makes it easier for certain companies to go public on US stock changes. It gives private companies more access to capital from various sources.

What benefits does competition bring to consumers? (Select all that apply.)

It offers consumers more choices in the marketplace. It can lead to lower prices for consumers on goods and services.

How is the JOBS Act helping to stimulate business? (Select all that apply.)

It offers easier registration for a public company under federal regulations It permits companies to sell securities through crowd funding or the internet.

What is the primary function of the Federal Deposit Insurance Corporation?

It provides consumers protection in case of bank failures.

Which argument would supporters of a free market economy most likely use to argue that instability is acceptable?

Market corrections are difficult but necessary. The benefits people receive from innovation and freedom in a free market are worth the cost of instability.

Which is a description of scarcity?

People have limited resources, so they must pick which wants to satisfy.

Which are considered goods? (Select all that apply.)

Pool Table Computer Couch

Oil Change

Service

Teaching

Service

Which is true regarding the FDIC?

The FDIC takes over failed banks

Which accurately describes why the FDIC was created?

The FDIC was created in 1933 after many bank failures caused the Great Depression.

Read the sentence. The US government plays an impactful role in the economy, both directly and indirectly. Which is an example of the federal government indirectly affecting the market economy?

The US government provides social security benefits for senior citizens

What do the three basic economic questions determine?

The allocation of resources.

In a free market economy, which is true regarding the role of the consumer?

The consumer determines what is produced

What does macroeconomics deal with?

The economy as a whole.

Which explains the US government's role in promoting competition?

The government plays an active role in promoting competitions at all levels.

What does microeconomics deal with?

The impact of individual and business decisions on economic markets.

What is the definition of economics?

The production, distribution, and consumption of goods and services in one country.

Which is an advantage of the sole proprietorship and partnership business models?

They are both easy to set up

Why did the US government establish the FDIC?

To provide deposit insurance for bank customers

What is the primary role of producers in the marketplace?

To provide goods and services

Which accurately describes aspects of a partnership business structure? (Select all that apply.)

Two or more individuals share the losses incurred by a business Two or more individuals share the profits generated by a business.

What is one fundamental principle, or question, of economics?

What should the country produce?

In which situation is the US government most likely to regulate the marketplace?

When business practices decrease competition.

Characteristics of Microeconomics

examines how much is produced and the consumers' willingness to buy deals with the prices of goods and services determines the number of suppliers and businesses demographically measures the number of households demanding products or services

Read the scenario. Kristine and Katherine are looking to team up. They want an already established business with a great corner store location and the independence to make something good turn into something better. Which are their best options? (Select all that apply.)

franchise partnership

Read the sentence. Capitalism drives the constant rotation of business opportunity, _[blank]_, and failure. Which most accurately completes the sentence?

growth

What were the functions of the Tennessee Valley Authority Act? (Select all that apply.)

improve navigation along the Tennessee River. Develop agriculture and forest in the valley

What economic theory was proposed by Adam Smith and explains that an economy's success is determined by people's ability to pursue their own financial self-interest?

invisible hand

Read the sentence. The housing bubble expanded in 2003 when _[blank]_ were at a 50-year low. Which best completes the sentence?

mortgage interest rates

Read the scenario. Georgia wants to open her own business. She is looking for flexible hours, low overhead costs, and no need for a physical store with total control of the company. Which are her best options? (Select all that apply.)

online business home-based business

Read the sentence. Subprime mortgages allowed many individuals to become homeowners; however, sometimes their credit scores were _[blank]_. Which most accurately completes the sentence?

poor

Which are characteristics of a traditional market system? (Select all that apply.)

predominance of agriculture strong community network.

Which are characteristics of a command market system? (Select all that apply.)

priorities for the production of goods stricter laws to regulate economic activity

What were the goals of the Tennessee Valley Authority Act? (Select all that apply.)

provide power at a lower cost. improve the economy of the southeast.

Read the sentence. When society does not have enough resources to produce all of the things people want, it is known as _[blank]_. Which correctly completes the sentence?

scarcity