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Questions and Answers
In a market economy, who primarily owns productive activities?
In a market economy, who primarily owns productive activities?
What determines production in a market economy?
What determines production in a market economy?
What is a key characteristic of a command economy?
What is a key characteristic of a command economy?
Which of the following is a characteristic of a mixed market economy?
Which of the following is a characteristic of a mixed market economy?
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What situation describes a surplus in a market economy?
What situation describes a surplus in a market economy?
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Which term defines the willingness and ability of buyers to purchase a product?
Which term defines the willingness and ability of buyers to purchase a product?
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In terms of economic systems, what is the process of converting government enterprises into privately owned companies called?
In terms of economic systems, what is the process of converting government enterprises into privately owned companies called?
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Which economy historically has no incentive for individuals to innovate in meeting needs?
Which economy historically has no incentive for individuals to innovate in meeting needs?
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What defines the primary function of a business?
What defines the primary function of a business?
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Which of the following best describes the external environment of a business?
Which of the following best describes the external environment of a business?
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What elements make up the domestic business environment?
What elements make up the domestic business environment?
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What is meant by the global business environment?
What is meant by the global business environment?
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How do markets, demand, and supply primarily affect a business?
How do markets, demand, and supply primarily affect a business?
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What is the difference between revenues and expenses in a business context?
What is the difference between revenues and expenses in a business context?
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Which of the following is NOT an external environment affecting a business?
Which of the following is NOT an external environment affecting a business?
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What role does the economic environment play in a business's success?
What role does the economic environment play in a business's success?
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What does the political-legal environment focus on?
What does the political-legal environment focus on?
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Which of the following describes the economic system of a nation?
Which of the following describes the economic system of a nation?
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What term is used to describe the physical and intellectual contributions people make in production?
What term is used to describe the physical and intellectual contributions people make in production?
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What does the term 'business cycle' refer to?
What does the term 'business cycle' refer to?
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Which of the following is NOT considered a factor of production?
Which of the following is NOT considered a factor of production?
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In which political system are individual rights prioritized over group rights?
In which political system are individual rights prioritized over group rights?
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What is aggregate output primarily a measure of?
What is aggregate output primarily a measure of?
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What type of resources include market forecasts and economic data?
What type of resources include market forecasts and economic data?
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Which of the following best describes Gross Domestic Product (GDP)?
Which of the following best describes Gross Domestic Product (GDP)?
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Which factor of production is specifically associated with the financial resources required to operate a business?
Which factor of production is specifically associated with the financial resources required to operate a business?
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How is GDP growth measured?
How is GDP growth measured?
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What does GDP per capita indicate?
What does GDP per capita indicate?
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What does the sociocultural environment influence in business?
What does the sociocultural environment influence in business?
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Which of the following distinguishes Gross National Product (GNP) from GDP?
Which of the following distinguishes Gross National Product (GNP) from GDP?
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Which of the following is NOT a characteristic of the standard of living?
Which of the following is NOT a characteristic of the standard of living?
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What is a key limitation of using GDP as a measure of economic well-being?
What is a key limitation of using GDP as a measure of economic well-being?
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What does nominal GDP measure?
What does nominal GDP measure?
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What does purchasing power parity (PPP) aim to achieve?
What does purchasing power parity (PPP) aim to achieve?
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How is productivity defined?
How is productivity defined?
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What does a positive balance of trade indicate?
What does a positive balance of trade indicate?
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What is inflation characterized by?
What is inflation characterized by?
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What is the primary focus of the Consumer Price Index (CPI)?
What is the primary focus of the Consumer Price Index (CPI)?
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Which term describes a prolonged and deep recession?
Which term describes a prolonged and deep recession?
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What does economic stability imply?
What does economic stability imply?
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Study Notes
Economic Systems
- A nation's system of allocating resources among its citizens.
Types of Economic Systems
-
Market Economy:
- All productive activities are privately owned.
- Production is determined by supply and demand.
- Government encourages competition.
-
Command Economy:
- Government plans goods, services, quantity, and price.
- All businesses are state-owned.
- Historically found in communist economies.
- No incentive for individuals to innovate.
-
Mixed Market Economy:
- Blends elements of command and market economies.
- Privatization: Converting government enterprises into privately owned companies.
- Example: People's Republic of China is moving towards a mixed market economy.
Demand and Supply
- Demand: Willingness and ability of buyers to purchase a product.
- Supply: Willingness and ability of producers to offer a product for sale.
Surpluses and Shortages
- Surplus: Quantity supplied exceeds quantity demanded.
- Shortage: Quantity demanded exceeds quantity supplied.
Factors of Production
- Labor (Human Resources): Physical and intellectual contributions people make.
- Capital: Financial resources needed to operate a business.
- Entrepreneurs: Accept risks and opportunities in creating new businesses.
- Physical Resources: Tangible things used for business operations (natural resources, raw materials).
- Information Resources: Data and information used by businesses.
The External Environment of Business
- Domestic Business Environment: The environment in which a firm conducts operations.
- Global Business Environment: International forces affecting a business (trade agreements, economic conditions, political unrest).
- Technological Environment: Ways firms create value.
- Political-Legal Environment: Relationship between business and government.
- Sociocultural Environment: Customs, values, and demographics of a society.
- Economic Environment: Relevant conditions in an economic system.
Business and Profit
- Business: Organization that provides goods or services to earn profits.
- Profits: Difference between revenues and expenses.
Economic Growth
- Business Cycle: Pattern of short-term ups and downs in an economy.
- Aggregate Output: Total quantity of goods and services produced.
- Standard of Living: Total quantity and quality of goods and services citizens can purchase.
Gross Domestic Product (GDP)
- GDP: Total value of goods and services produced within a national economy in a given period.
- GDP per capita: GDP divided by the population, a measure of output per person.
Gross National Product (GNP)
- GNP: Total value of goods and services produced by a national economy, regardless of where factors of production are located.
Productivity
- Productivity: Measure of economic growth comparing output to resources used.
- Balance of Trade: Difference between the economic value of exports and imports.
- National Debt: Amount of money a government owes its creditors.
Economic Stability
- Stability: Balanced growth in the amount of money and goods and services produced.
- Inflation: Widespread price increases.
- Consumer Price Index (CPI): Measure of prices for typical consumer goods.
- Unemployment: Level of joblessness among those actively seeking work.
- Recession: Period of decline in aggregate output (GDP).
- Depression: A prolonged and deep recession.
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Description
This quiz covers the fundamental concepts of various economic systems, including market, command, and mixed economies. It also explores key elements such as demand, supply, surpluses, and shortages. Test your knowledge on how these systems function and their implications on resource allocation.
