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Economics: Chapter 2

Terms in this set (36)

economic system that combines features of market economy and command economy
mixed economy
the material well-being of an individual, group, or nation
standard of living
economic fairness and justness
economic equity
economic system in which the government minimizes its interference in the economy
laissez-faire
economic system in which economic decisions are made by individuals rather than the government
market economy
rivalry among producers to win business
competition
economic system in which economic decisions are made by the government
command economy
desire to make money that motivates people to produce and sell goods and services
profit incentive
money left over after all the costs of production have been paid
profit
economic system in which decisions are based on customs and beliefs
traditional economy
freely chosen activity between buyers and sellers of goods and services
market
economic system in which individuals own the factors of production and make their own economic decisions
market economy
whatever is owned by individuals rather than by the government
private property
expansion of the economy to produce more goods, jobs, and wealth
economic growth
a free enterprise system is based on individual initiative (T/F)
true
in a laissez-faire system, the government does not interfere in the economy (T/F)
true
in a system of pure competition, the role of the government is to regulate prices (T/F)
false
in a command economy, economic decisions are made by individuals (T/F)
false
economic equity refers to how rapidly an economy grows (T/F)
false
the kind of system in which the individuals own and control the factors of production is a command economy (T/F)
false
Adam Smith's "invisible hand" refers to the role of:

A: the market
B: the government
C: customs and beliefs
D: factors of production
A: the market
The three basic questions of economics should be answered by:

A: all economies
B: market economies
C: mixed economies
D: command economies
A: all economies
A laissez-faire system is one in which:

A: government interference in the economy is minimal
B: government controls the factors of production
C: government purchases goods and services from consumers
D: individuals and the government make economic decisions
A: government interference in the economy is minimal
According to Adam Smith:

A: left to themselves, individuals would mishandle the economy
B: government should not interfere in the marketplace
C: a mixed economy combines all of the benefits of a command and a market economy
D: the role of the government is to allocate resources
B: government should not interfere in the marketplace
Which of the following countries has a command economy:

A: South Korea
B: North Korea
C: Taiwan
D: France
B: North Korea
The word equity means:

A: fairness
B: expansion
C: profitability
D: equality
A: Fairness
A major characteristic of a pure market economy is:

A: an oversupply of labor
B: unrestricted competition
C: regulated prices
D: strong government planning
B: unrestricted competition
In a capitalist system, most property is:

A: owned by the government
B: regulated by the government
C: private property
D: owned by banks
C: private property
Another term for a capitalist system is a:

A: market economy
B: mixed economy
C: command economy
D: laissez-faire system
A: market economy
It is easier to start your own business in a:

A: free enterprise system
B: traditional economy
C: command economy
D: controlled economy
A: free enterprise system
A pure market economy is one in which the ______ does not intervene.
government
In a market economy, the basic question of what should be produced is answered by __________.
the individual
The ____________ is one measure of the material well-being of individuals, groups, or nations.
standard of living
In the United States, production decisions are made primarily by ________.
individuals
In a _________ system, individuals are free to own and control the factors of production.
free enterprise
Every economic system must answer three basic questions to plan the use of its ________.
resources
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