Chapter 2 Short Answer

How does the US government protect private property?

federal and state laws

How do self-interest and competition affect the free market?

self interest determines demand for products and competition determines price

Give two examples of how an incentive influences your behavior in your community, in school, or as a consumer.

1. If I don't but gas then my car will stop running 2. I want to be able to go out with friends, so I get a job to have money

Explain what Adam Smith meant by the "invisible hand" of the marketplace.

it is self regarding without people realizing it

What are the characteristics of a free market economy?

private owned property/business economic freedom only some government involvment

Describe how you think today's american society answers the three key economic questions?

due to our freemarket society has the right to chose what is produced and how and people themselves decide their needs

What are the characteristics of a centrally planned economy?

- government controls how questions answered (controls products of productions) - oppose free market pricing -no consumer sovereignty

What are the characteristics of a mixed economy?

-government involved to an extent -market based -prioritizes economic goals

What benefits might citizens of a centrally planned economy derive from a move toward a market-based system? What risks might be involved?

-more freedom and choices economically for people and more economic security -people will abuse new freedoms not accustomed to

what does a centrally planned economy oppose that a market economy encourages?

private property, free market pricing, competition, consumer choice