Economics Chapter 2 Flashcards
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Questions and Answers

What is an economic system?

Term used to describe how a nation is organized for production.

What are the 3 kinds of economic systems?

  • Traditional (correct)
  • Socialist
  • Market (correct)
  • Command (correct)

    • What are models in economics?

    Simplified pictures of reality.

    No modern economic system completely fits the models.

    <p>True</p> Signup and view all the answers

    What is a traditional economic system?

    <p>One in which people's economic roles are the same as those of their parents and grandparents.</p> Signup and view all the answers

    Can you give examples of countries that have traditional economic systems today?

    <p>Small agricultural villages in parts of South America, Asia, and Africa.</p> Signup and view all the answers

    What characterizes a market economic system?

    <p>Economic decisions are the result of individual decisions by buyers and sellers in the marketplace.</p> Signup and view all the answers

    What are market systems also known as?

    <p>Free enterprise systems.</p> Signup and view all the answers

    What is capitalism?

    <p>The means of production are privately owned.</p> Signup and view all the answers

    What kind of economic system does the U.S. have?

    <p>90% market economy and 10% command economy.</p> Signup and view all the answers

    Who are considered competitors in an economic context?

    <p>Other businesses selling the same items or services.</p> Signup and view all the answers

    In market systems, how is success determined?

    <p>Success depends on demand by consumers for the goods.</p> Signup and view all the answers

    What is a command economic system?

    <p>The main decision maker is government; means of production owned by government.</p> Signup and view all the answers

    What decisions does the government make in a command economic system?

    <p>Decides what goods &amp; services are to be produced, owns places where production takes place, sells goods and services, and decides how talents &amp; skills of workers will be used.</p> Signup and view all the answers

    Can you give examples of Communist countries?

    <p>Cuba, Vietnam, former Soviet Union, China.</p> Signup and view all the answers

    What is the idea of a communist country?

    <p>Everyone has talents and skills that are contributed equally; everyone receives benefits equally.</p> Signup and view all the answers

    What happens if you are a famous person in a Communist country?

    <p>You'll have access to more goods &amp; services because you have higher status.</p> Signup and view all the answers

    What do all 4 economic systems have in common?

    <ol> <li>They must answer 4 questions 2) They have to deal with the scarcity of economic resources 3) They have mixed economies.</li> </ol> Signup and view all the answers

    What are the 4 questions that each economic system must answer?

    <ol> <li>What goods &amp; services should be produced 2) How should goods and services be produced 3) Who will receive the goods &amp; services that are produced 4) Who owns the means of production in economic systems.</li> </ol> Signup and view all the answers

    Although each economic system must answer the 4 questions, they answer the questions ____________.

    <p>differently</p> Signup and view all the answers

    In a traditional system, who decides what is produced?

    <p>Habit or custom decides what will be produced, same as grandparents and parents.</p> Signup and view all the answers

    In a market system, who decides what is produced?

    <p>Decided by individuals or companies seeking opportunities for profit.</p> Signup and view all the answers

    In a command economic system, who decides what is produced?

    <p>What question decided by government.</p> Signup and view all the answers

    In a traditional system, how is production determined?

    <p>Made using the same procedures as in the past, same as parents and grandparents.</p> Signup and view all the answers

    In a market system, how is production determined?

    <p>Factory owner will decide how the product will be produced.</p> Signup and view all the answers

    In a command system, how is production determined?

    <p>Decided by government.</p> Signup and view all the answers

    In a traditional system, who receives the goods?

    <p>Family group and tribal/feudal chiefs.</p> Signup and view all the answers

    In a market system, who receives the goods?

    <p>Consumers who can buy them.</p> Signup and view all the answers

    In a command system, who receives the goods?

    <p>Government decides.</p> Signup and view all the answers

    In a traditional system, who owns the means of production?

    <p>Families.</p> Signup and view all the answers

    In a market system, who owns the means of production?

    <p>Individuals/companies.</p> Signup and view all the answers

    In a command system, who owns the means of production?

    <p>Government.</p> Signup and view all the answers

    What are mixed economies?

    <p>With some free enterprise and some government ownership.</p> Signup and view all the answers

    What defines a market economy?

    <p>Private ownership of means of production; decisions by consumers and businesses determine economic activity.</p> Signup and view all the answers

    What defines a mixed economy?

    <p>Public and private ownership of means of production; decisions by consumers and businesses and by government determine economic activity.</p> Signup and view all the answers

    What defines a command economy?

    <p>Public ownership of means of production; decisions by government determine economic activity.</p> Signup and view all the answers

    What book did Karl Marx and Friedrich Engels write in 1848?

    <p>Communist Manifesto.</p> Signup and view all the answers

    What did Marx and Engels claim?

    <p>Claimed class struggle always existed between ruling class and lower classes.</p> Signup and view all the answers

    Who made up the ruling classes during the Middle Ages?

    <p>Roman Catholic Church &amp; nobility.</p> Signup and view all the answers

    Who made up the lower classes in Europe?

    <p>Peasants and middle class.</p> Signup and view all the answers

    What did Marx say about the middle class?

    <p>Said that the middle class was exploiting those who worked for wages.</p> Signup and view all the answers

    What does exploiting mean?

    <p>Taking advantage of.</p> Signup and view all the answers

    What is the lower class also known as?

    <p>Proletariat.</p> Signup and view all the answers

    What is proletariat?

    <p>Workers.</p> Signup and view all the answers

    What did Marx believe?

    <p>Discontent among the working class would establish capitalism and establish communism; also that a Communist state would start out as a dictatorship to build Communist society and to fight off its capitalist neighbors.</p> Signup and view all the answers

    What is communism?

    <p>Classless society.</p> Signup and view all the answers

    Since there would be only one class, the working class, there would no longer be...

    <p>A class struggle and no need for government.</p> Signup and view all the answers

    What did Marx predict?

    <p>Predicted that eventually workers in every country would overthrow their capitalist ruling class, and that all nations would become Communist; that dictatorship would eventually occur.</p> Signup and view all the answers

    What happened in 1917?

    <p>Two revolutions took place in Russia.</p> Signup and view all the answers

    What was the 2nd revolution?

    <p>Russian Communist party under V.I. Lenin seized control.</p> Signup and view all the answers

    What did the Russian Communist party create?

    <p>Communist state, Soviet Union.</p> Signup and view all the answers

    Who rose to power in the mid-1920s?

    <p>Joseph Stalin.</p> Signup and view all the answers

    What did Stalin attempt to do when he became leader?

    <p>He found himself at the head of an industrially backward nation and attempted to modernize the Soviet economy as fast as possible.</p> Signup and view all the answers

    What kind of plans did Stalin institute?

    <p>5-year plans.</p> Signup and view all the answers

    What are 5-year plans?

    <p>Set production goals and tried to assign resources necessary to achieve those goals; plan provided for materials and facilities needed to meet goals.</p> Signup and view all the answers

    What are quotas?

    <p>Targets.</p> Signup and view all the answers

    Study Notes

    Economic Systems Overview

    • Economic systems dictate how nations organize production and resource allocation.
    • Three main types of economic systems: traditional, market, and command economies.

    Traditional Economic System

    • Roles and economic practices are inherited from previous generations.
    • Common in small agricultural communities in parts of South America, Asia, and Africa.

    Market Economic System

    • Decisions arise from individual choices by buyers and sellers.
    • Also known as free enterprise systems, where capitalism prevails with private ownership of production.
    • The U.S. economy is approximately 90% market and 10% command.

    Command Economic System

    • The government is the primary decision-maker, owning production means.
    • Decisions include what goods and services to produce and how to utilize labor.
    • Examples of command economies can be found in countries like Cuba, Vietnam, the former Soviet Union, and China.

    Economic System Functions

    • All four systems must address four fundamental questions:
      • What goods & services should be produced?
      • How should these goods and services be produced?
      • Who will receive the goods and services produced?
      • Who owns the means of production?
    • Each system provides different answers based on their structure.

    Economic Decisions in Systems

    • Traditional systems rely on customs and traditions for production and ownership.
    • Market systems depend on individual and corporate profit motives.
    • Command systems centralize authority, with the government making all significant decisions.

    Mixed Economies

    • Feature a combination of private enterprise and government ownership.
    • Decisions in mixed economies are influenced by both consumers/businesses and government.

    Karl Marx and Friedrich Engels

    • Co-authored the "Communist Manifesto" in 1848, arguing that class struggles are inherent.
    • Ruling classes historically included the Roman Catholic Church and nobility, while lower classes comprised peasants and the burgeoning middle class.

    Proletariat and Class Struggle

    • The proletariat refers to the working class, whom Marx viewed as exploited by the middle class.
    • Marx theorized that discontent among workers would lead to a communist revolution.

    Marxist Predictions

    • Marx anticipated a worldwide overthrow of capitalist regimes, leading to a classless society.
    • He suggested that the initial communist state would require dictatorial authority to suppress capitalist opposition.

    Historical Context in Russia

    • The Russian Revolution of 1917 saw the Communist Party, under Lenin, seizing power to establish the Soviet Union.
    • Joseph Stalin later rose to prominence, initiating rapid industrialization through five-year plans focused on production goals and resource management.

    Five-Year Plans and Quotas

    • Stalin’s plans set ambitious targets to modernize the Soviet economy, providing structured goals for resource allocation.

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    Description

    Test your knowledge of key concepts from Economics Chapter 2 with these flashcards. Explore terms related to economic systems, models, and their definitions. Enhance your understanding of how nations organize production and the various economic models in play.

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