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Questions and Answers
Which of the following is a benefit of a free market?
Which of the following is a benefit of a free market?
A command economy promotes innovation due to competition among businesses.
A command economy promotes innovation due to competition among businesses.
False
What is the primary function of a system in economic terms?
What is the primary function of a system in economic terms?
Managing resources, production, and distribution.
In a command economy, the government controls most aspects of _____ activity.
In a command economy, the government controls most aspects of _____ activity.
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What is a disadvantage of a command economy?
What is a disadvantage of a command economy?
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Match the economic system to its characteristic:
Match the economic system to its characteristic:
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One of the advantages of a free market is the lack of environmental degradation.
One of the advantages of a free market is the lack of environmental degradation.
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List one pro and one con of a free market.
List one pro and one con of a free market.
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What is one potential downside of a lack of competition in an economy?
What is one potential downside of a lack of competition in an economy?
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A traditional economy relies heavily on modern technology for production.
A traditional economy relies heavily on modern technology for production.
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What can a mixed economy do to help reduce inequality?
What can a mixed economy do to help reduce inequality?
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In a __________ economy, the government makes decisions on production, leading to limited consumer choice.
In a __________ economy, the government makes decisions on production, leading to limited consumer choice.
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Match the following economy types to their characteristics:
Match the following economy types to their characteristics:
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What is a pro of having a mixed economy?
What is a pro of having a mixed economy?
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Higher taxes in a mixed economy are solely due to government inefficiencies.
Higher taxes in a mixed economy are solely due to government inefficiencies.
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What risk can excessive government intervention in a mixed economy lead to?
What risk can excessive government intervention in a mixed economy lead to?
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Which of the following is NOT a pro of localized economies?
Which of the following is NOT a pro of localized economies?
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Localized economies focus on technology advancement to enhance productivity.
Localized economies focus on technology advancement to enhance productivity.
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What is one challenge faced by students from low-income families regarding education?
What is one challenge faced by students from low-income families regarding education?
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Globalization can lead to job losses in wealthier nations due to companies outsourcing to _______ markets.
Globalization can lead to job losses in wealthier nations due to companies outsourcing to _______ markets.
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Match the following factors with their effects on inequality:
Match the following factors with their effects on inequality:
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What can cause resistance to change in local economies?
What can cause resistance to change in local economies?
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Communities with strong social cohesion are typically less vulnerable to external shocks.
Communities with strong social cohesion are typically less vulnerable to external shocks.
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What is one advantage of small-scale localized production?
What is one advantage of small-scale localized production?
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Which of the following best describes fiscal policy?
Which of the following best describes fiscal policy?
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Monetary policy is used to directly regulate public spending.
Monetary policy is used to directly regulate public spending.
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What is the term used to describe the condition where demand exceeds supply?
What is the term used to describe the condition where demand exceeds supply?
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The average economic well-being of citizens is measured by GDP per ______.
The average economic well-being of citizens is measured by GDP per ______.
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Match the economic industries with their descriptions:
Match the economic industries with their descriptions:
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Which of the following is NOT a characteristic of surplus?
Which of the following is NOT a characteristic of surplus?
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Scarcity forces individuals and societies to make choices regarding resource allocation.
Scarcity forces individuals and societies to make choices regarding resource allocation.
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What does GDP stand for in the context of economic activity?
What does GDP stand for in the context of economic activity?
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What does a high unemployment rate typically indicate?
What does a high unemployment rate typically indicate?
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Moderate inflation is usually viewed as a negative sign for the economy.
Moderate inflation is usually viewed as a negative sign for the economy.
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What role do interest rates play in economic health?
What role do interest rates play in economic health?
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When government spending exceeds its revenues in a given year, it is called a ______.
When government spending exceeds its revenues in a given year, it is called a ______.
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Match the economic terms with their descriptions:
Match the economic terms with their descriptions:
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What can excessive inflation lead to?
What can excessive inflation lead to?
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A low unemployment rate is generally a sign of a healthy economy.
A low unemployment rate is generally a sign of a healthy economy.
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What might happen if a country has persistent high levels of debt?
What might happen if a country has persistent high levels of debt?
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What is the point where the two curves intersect called?
What is the point where the two curves intersect called?
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An increase in consumer preferences for a product will shift the demand curve to the left.
An increase in consumer preferences for a product will shift the demand curve to the left.
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Name two examples of hard commodities.
Name two examples of hard commodities.
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When the cost of production rises, the supply curve shifts to the ______.
When the cost of production rises, the supply curve shifts to the ______.
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Which of the following describes an increase in supply?
Which of the following describes an increase in supply?
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Match the following commodities with their categories:
Match the following commodities with their categories:
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Soft commodities always involve raw materials that are mined or extracted.
Soft commodities always involve raw materials that are mined or extracted.
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What happens to the price and quantity when there is a decrease in demand?
What happens to the price and quantity when there is a decrease in demand?
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Study Notes
Systems
- Systems are structures for managing resources, production, and distribution.
- Free Market: Individuals and businesses make decisions with minimal government interference, driven by supply and demand.
- Pros: Efficient resource allocation, encourages innovation, consumer choice, and market flexibility.
- Cons: Inequality in wealth distribution, resource wastage (market failure), exploitation of workers, and lack of public goods.
- Command Economy: Government controls most aspects of economic activity, including production, pricing, and distribution.
- Pros: Promotes equality, economic stability, efficient use of resources for national goals, and prevents monopolies.
- Cons: Inefficiency, lack of innovation, limited consumer choice, and potential for authoritarianism.
- Mixed Economy: Combines elements of both free-market and command economies, with both government and private sector involvement.
- Pros: Balance between freedom and control, flexibility, public services and welfare, and reduced inequality.
- Cons: Potential government inefficiency, particularly in heavily regulated industries.
Traditional Economy
- Production and distribution are guided by customs, traditions, and community-based decisions.
- Pros: Stability, sustainability, strong community bonds, low environmental impact.
- Cons: Limited economic growth, inefficient resource use, resistance to change, lack of access to modern resources, and vulnerability to external shocks.
Solutions
- Education: Access to quality education leads to higher income potential.
- Progressive Tax System: Redistribute wealth by taxing higher earners at a higher rate.
- Minimum Wage: Increased income for low-wage workers.
- Worker's Rights: Fair wages, safe conditions, and job security reduce inequality.
Economic Vocabulary
- Microeconomics: Individual people and businesses.
- Macroeconomics: The overall economy (national income, unemployment, inflation).
- Supply: The amount of a good or service producers are willing to sell at different prices.
- Demand: The amount of a good or service consumers want to buy at different prices.
- Opportunity Cost: The value of what you give up when choosing one thing over another.
- Elasticity: How quantity demanded/supplied changes when the price changes.
- Market Equilibrium: The price where supply equals demand.
- Consumer Choice: Individual decisions about what to buy.
- GDP (Gross Domestic Product): The total value of goods and services in a country.
- Inflation: General increase in prices.
- Unemployment Rate: The percentage of the workforce without jobs.
- Fiscal Policy: Government policies related to spending and taxes.
- Monetary Policy: Actions by central banks to control the money supply and interest rates.
- Scarcity: Limited resources.
- Surplus: Supply exceeds demand.
- Goods: Physical items.
- Services: Intangible activities.
Industries
- Primary Industry: Extraction (agriculture, mining, fishing).
- Secondary Industry: Manufacturing (cars, clothing).
- Tertiary Industry: Services (healthcare, education).
- Quaternary Industry: Knowledge-based activities (research).
Economic Factors
- GDP: Measures overall economic activity.
- Unemployment Rate: Percentage of the workforce without jobs.
- Inflation Rate: Measures the rate at which prices increase.
- Interest Rates: The cost of borrowing money.
- Government Debt/Deficits: Measurement of government spending and borrowing.
Supply & Demand
- Supply and Demand are fundamental economic concepts.
- Demand: The amount of a good/service consumers want to buy at different prices.
- Supply: The amount of a good/service producers are willing to sell at different prices.
- The point where supply and demand intersect is market equilibrium.
- Shifts in curves: Shifts in supply/demand affect price and quantity (right for increase, left for decrease).
- Commodity: A basic good or raw material (hard and soft commodities).
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Description
Test your knowledge of different economic systems, including free market, command, and mixed economies. Explore the advantages and disadvantages of each system, as well as their characteristics. This quiz will challenge your understanding of economic principles and their real-world applications.
