Chapter 2/3 Economics Main Ideas

What are the four roles of the government in a capitalist economy?

1. protector 2. provider 3. regulator 4.consumer

Which parties are affected by government intervention in a mixed economy?

All participants

Which of the following is NOT a benefit to the economy that entrepreneurs provide?

Better regulation of the marketplace

In which way do consumers determine the WHAT to PRODUCE question?

By purchasing desirable products, consumers reward some producers with profits.

How is the level of government intervention in the American free enterprise system determined?

By the voting public

What is one advantage of a mixed market economy in a democracy?

Citizens can vote to help those in need economically.

Explain why the consumer is sovereign or has all the power in a free market economic system?

Consumers have the power to buy or not to buy, which affects the entire economy as a whole

Which is NOT an advantage of a mixed market economy?

Decentralized decision making

What are the five characteristics of a free market, capitalist economy(free enterprise)?

Economic freedom Buy what you want, sell what you want, do the job you want to do Freedom to risk success or failure Voluntary exchange Buyers and sellers freely engage in market transactions Exchange benefits both Private Property People own and control their possessions as they wish Gives incentive to work Makes borrowing possible and investing attractive Profit Motive Incentive to improve your material well-being Freedom to seek profit ensures a stream of products Competition Struggle among sellers to provide consumers with the best products at the lowest prices Benefits consumers - bad products disappear Helps make sure resources are used efficiently

Which of the following is NOT a way that government serves as a regulator in the marketplace?

Funding road construction

Why is China considered a mixed economy?

Its economy includes government control as well as market and tradition.

What type of economy is most common worldwide?

Mixed

Which of the following is a role an entrepreneur might play?

Organizing and managing resources to try to gain profits

What is a market economy based on?

People in their own best interests to answer the what, how, and for whom questions This is based on the consumer Supply and demand

Which represents a way that government serves as a consumer?

Providing a system of national defense by building a strong army, navy, and air force

What are the three words we discussed that describe a traditional economy?

Ritual, habit, custom

Strengths/Weaknesses of a Market Economy?

Strengths Can adjust to change over time; dependent upon the consumer Producers have the freedom to make what they want if they think it will sell Consumers can buy whatever they so choose Allows for competition, almost any product can and will be produced if a buyer for it exists. Weaknesses: Who reaps the benefits? Not everyone's basic needs are met Personal economic insecurity The rich get richer, the poor get poorer Some valuable services like education, justice, and health care are not provided equally

Strengths/Weaknesses of a Command Economy?

Strengths The economy can change drastically to fit drastic times Little uncertainty, decisions made for them Weaknesses: Does not look out for the individual Does not look out for Now but rather for the future No incentives for the labor

Strengths/Weaknesses of a Traditional Economy?

Strengths: Life is generally stable, predictable and continuous. Leads to a stable lifestyle. Weaknesses: The Probability of advancement is minimal Low standard of living How would life be different if you grew up in this society.

What incentives does private property give people living in the United States?

The ability to own property and have the freedom to mostly do what they want, the freedom to build, etc.

What type of an economic system does the United States have? Describe why...

The united states has a mixed market system. The economic system of the United States is principally one of private ownership. This system, often referred to as a "free enterprise system," can be contrasted with a socialist economic system, which depends heavily on government planning and public ownership of the means of production.

Why do mixed economies grow faster than traditional economies?

because they embrace reforms like allowing private property and using markets

One role the government does poorly is that of acting as a(n)

entrepreneur.

In the "communist" economies that exist today...

governments exert great control over the economy

A state in which everyone contributes according to their abilities and consumes based on their needs

has never existed

An example demonstrating how consumers have more choices now than ever before is that

people can buy products on the Internet from all over the world.

There are many mixed economies in the world today because

people wanted benefits that strictly traditional, capitalistic, or communist economies did not provide.

Programs that provide services for the public using taxpayer dollars are often considered

socialist.

The level of government involvement in a mixed economy can best be described as

varied.

Most command economies can be identified with a _______________________ ?

with a dictatorship