Economic Systems

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What is an economic system?
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Terms in this set (28)
What is an economic system?
The system that a country uses in order to solve a country's economic problem
True or false. A country's economic system influences the way people act in the country.
False, an economic system influences the way the country's economic activities are organized and how businesses operate.
Does the economic problem consist of limited wants? True or false, if false further explain your answer.
False, people have unlimited wants and needs but limited resources.
How can a country solve the economic problem?
By having a system that indicates how the resources will be allocated to who, what will be made, and to whom it will be sold. The three basic economic questions answer that.
How do the factors of production come in fit with the economic problem of scarcity?
The factors of productions include, natural resources, labor, capital and entrepreneurship. Without the major factor which is the natural resources then their would be no labor and entrepreneurship and capital available and made.
There are three basic economic questions that must be asked. What, how and for who? How do these questions differ from country to country?
Some countries government takes on full responsibility and leadership to answer these question of what will be produced, how it will be produced and for who it will be produced.
Other countries have private sectors who manage their own businesses this method allows people to make profit.
Name the three main economic systems used throughout the world.
1. Centrally planned economic system
2. Free market economic system
3. Mixed economic system
Define a centrally planned economy.
All the decisions of the country' s economic questions are made by the government.
State some characteristics of a centrally planned economic system.
1. Government controls all factors of production

2. Government answers the economic questions of what/ how/ for whom...

3. Government in charge of satisfying the people's basic needs
What are some advantages of a centrally planned economic system?
1. The resources are used at the equality if everyone.

2. Economically vulnerable people ( poor) are protected.

3. Economic equality is achieved as there are no overly rich and poor.
How do the disadvantages of a centrally planned economy contribute to a country?1. The government cannot process all required information fast enough, so there can either be bad decisions made quickly without thought or economic activities can be in delay. 2. No profit earned by individuals. When the government owns the factors of production they are being the entrepreneur and making all the profits.A free market economic system is a system where...Economic decisions are made by private individual who own the factors of production.What are the main characteristics of a free market?1. Individuals own their own factors of production. 2. Individuals/ entrepreneur decide the economic questions of what/ how / for whom a product will be made.True or false. If false justify your answer. Economists argue, " Individuals do not seek to make profit as they own the factors of production and can always find new ways of producing efficient goods."False, individuals are motivated to make profit with the factors of productions at their feet they are entrepreneurs that are always finding new ways that are efficient to produce goods and services while making the best of the resources they have available.Describe how the free market economic out balances a country.1. Economic inequality, people that own the factors of economy are rich and this who don't are poor and there is no government to ensure some basic needs are reachable to everyone. 2. Self- interest, everyone is too busy looking after themselves when they are poor to consider helping out the needy or fixing roads and building hospitals and schools. 3. Exploitation, people working for high-class businesses are paid low wages to keep costs down so hat more money can be made, greed. 4. Public goods aren't provided to help county's damages and construction needs.Mixed economies consist of...A mixture of centrally planned and free market economic systems. This system accepts both economic decisions made by the government and individualsWhat does a mixed economic system made up of?1. Private and government sectors controlling economic decisions and factors of production. 2. Government must solve public economic system. 3. Private and government businesses. 4. Government provides goods and services reachable by public. Hospitals/schools...What is the result in having a mixed economic system on an advantage.1. Increases national production in country. 2. Public and private provide wealth to the country. 3. Problems created by enterprise are easily solved 4. Profit can be earned 5. All national resources are utilized in a mixed economic systemThe mixed economic system seems to be the perfect choice for every country's way of dealing economically. But what are some disadvantages on crosses when talking about a mixed economic system?1. Drawbacks of capitalism as well as socialism. I.e tax must be paid to the government. 2. Wrong decision making leading to clash between free market principles and providing social services.Define "The global economy"Economic boundaries between countries are unclear and the movement and distribution of goods and factors of production is largely free of restriction.Define the term globalization.Globalization I'd the trend towards greater economic integration and cooperation between different countries.Would you say that globalization is a process? Write a clear statement why.Globalization is a process of starting to make the countries in the world trade the goods they have to other countries that don't have, this is a trend as many counties are doing it today, it's a process that is increasing everyday.Capitalism only exists in a free market system. True or false, explain your answer.False, capitalism exists when a business or individual adapts the principles of a free market, meaning they do not need government verification and instead are private individuals.Characteristics of the global economy include:1. Free trade in goods and services. People are permitted to import and export goods without government restrictions. 2. Free movement of labour. Individuals can seek better job opportunities and use their skills in other countries. 3. Free movement of capital. People who own businesses in different countries tend to have money from that currency that may he higher than the one in their country.True or false: "The global economy is characterized by high volume of international trade"True, international trade means to import and export from different counties and this happens all the time in global economy.Briefly say what some benefits of a global economy is.1. Expansion of businesses 2. Foreign countries benefit foreign goods and services. 3. Profit can be made. 4. Job opportunities.What problems are associated with global economy?1. Competition between foreigners and home country businesses 2. Skilled workers moving into higher developed countries to find work and instead leaves them poorer instead. 3. Investments made in higher currency countries.What is a sweatshop?A workplace where people are subject to extreme exploitation.