Economic System The former Soviet Union was an example of a communist country where
How does specialization affect an economy?
It prevents duplication of effort.
Which of the following countries is the most extreme example of a centrally-planned economy?
North Korea
Which statement applies to all centrally-planned economies?
The government makes all important economic decisions.
Which is a key economic question faced by all countries?
What goods and services should be produced?
The government decides which goods and services will be produced in a
command economy.
In a traditional economy, economic decisions are based largely on
custom.
Which economic goals are difficult to achieve in a pure market system?
equity and security
In return for supplying the factors of production—land, labor, or capital—people receive
factor payments.
Competition and self-interest are two important forces in
free market economies.
The circular flow model of a mixed economy shows
how government interacts with households and firms in the product and factor markets.
The doctrine that government should not intervene in the marketplace is called
laissez faire.
The free enterprise system of the United States is best described as a
mixed economy with limited government intervention and a great deal of economic freedom
The former Soviet Union was an example of a communist country where
most economic and political power was controlled by the government.
A social and political philosophy based on the belief that democratic means should be used to distribute wealth evenly throughout society is called
socialism.
In an economy in transition from central planning to free enterprise, you might expect to see
state firms sold to private individuals or entities.
The free market economist Adam Smith is NOT known for
the circular flow model of a mixed economy.
The self-regulating nature of the marketplace is called
the invisible hand.
Socialists believe economic equality is only possible if
the public controls the economy.
