Economic Systems: Command Economy vs. Laissez-Faire
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Questions and Answers

In a traditional command economy, who decides how much of a product is needed?

  • The consumer
  • The government (correct)
  • The corporations
  • The suppliers

    • What is a key feature of a laissez-faire capitalist system?

  • State-run economy
  • Strong government regulations
  • Limited government involvement (correct)
  • Central planning committee

    • Which economic system is based on the principles of supply and demand?

  • Traditional economy
  • Command economy
  • Capitalist economy (correct)
  • Mixed economy

    • What is a disadvantage of a traditional economy?

    <p>It discourages innovation</p> Signup and view all the answers

    What is a characteristic of a mixed economy?

    <p>Some government involvement</p> Signup and view all the answers

    What is a drawback of a command economy?

    <p>It leads to economic stagnation</p> Signup and view all the answers

    What is a disadvantage of a command economy?

    <p>No room for individuality</p> Signup and view all the answers

    What is a benefit of a mixed economy?

    <p>Provides public goods while allowing private competition</p> Signup and view all the answers

    What is a characteristic of a socialist system?

    <p>People's basic needs are taken care of</p> Signup and view all the answers

    What is a drawback of a capitalist system?

    <p>No public goods</p> Signup and view all the answers

    What is a benefit of a capitalist system?

    <p>High degree of customer satisfaction</p> Signup and view all the answers

    What is a disadvantage of a mixed economy?

    <p>Always winners and losers</p> Signup and view all the answers

    What is the main criticism of capitalism by Karl Marx?

    <p>It leads to exploitation of the lower class by the upper class</p> Signup and view all the answers

    In a mixed economy, the government's role is to:

    <p>Provide public goods and services, and intervene when necessary</p> Signup and view all the answers

    What is the main principle of the laissez-faire approach?

    <p>The government should provide public goods and services, but not interfere with the economy</p> Signup and view all the answers

    What is the main goal of a socialist economy?

    <p>Meet people's needs and achieve greater equity</p> Signup and view all the answers

    What is the concept that describes individuals acting in their own self-interest, leading to the greater good?

    <p>The invisible hand</p> Signup and view all the answers

    In a command economy, who plans the entire economy?

    <p>The government</p> Signup and view all the answers

    Study Notes

    Economic Systems

    • Traditional Economy: Based on customs, traditions, and rituals; decisions made on what, how, and for whom to produce are based on these factors.
    • Examples: Amish, some African countries, Australian Aborigines.

    Command Economy

    • Government decides what, how, and for whom to produce; everything is predetermined.
    • Examples: North Korea, Cuba, China (formerly).
    • Based on government plans and projections.

    Market Economy

    • Based on supply and demand; laissez-faire approach.
    • Examples: US before 1949, Canada, South Korea, Singapore, Great Britain, Germany.
    • Focuses on individual freedom and lack of government interference.

    Mixed Economy

    • Combines elements of market and command economies; government involvement in some aspects.
    • Examples: US after 1949, most countries today.
    • Regulates economy to prevent market failure and provides public goods.

    Three Main Questions of Economic Systems

    • What will be produced?
    • How will it be produced?
    • For whom will it be produced?

    Philosophy of Economic Systems

    • Traditional Economy: Focuses on customs and traditions.
    • Command Economy: Government decides people's needs.
    • Market Economy: Based on individual freedom and lack of government interference.
    • Mixed Economy: Combines elements of market and command economies.

    Key Figures

    • Karl Marx: Criticized capitalism, advocated for socialism.
    • Adam Smith: Advocated for laissez-faire approach, believed in the "invisible hand" of the market.

    Economic Functions of Government

    • Maintain the legal and social framework.
    • Provide public goods and services.
    • Regulate economy to prevent market failure.
    • Maintain tradition.
    • Provide for education and public health.
    • Decide how much is needed and produced.

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    Description

    Quiz about the advantages and disadvantages of command economies and laissez-faire systems, including their impact on individual freedom, government control, and economic production. Learn about the trade-offs between government-controlled and market-driven economies.

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