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Questions and Answers
What is the primary characteristic of a democracy?
What is the primary characteristic of a democracy?
Which term is synonymous with the political system in which citizens have the authority to choose their representatives?
Which term is synonymous with the political system in which citizens have the authority to choose their representatives?
What is a major advantage of representative democracy compared to direct democracy?
What is a major advantage of representative democracy compared to direct democracy?
What is one consequence of a command economy regarding necessities like healthcare?
What is one consequence of a command economy regarding necessities like healthcare?
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What historical example illustrates the principles of a command economy?
What historical example illustrates the principles of a command economy?
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What primarily characterizes a command economic system?
What primarily characterizes a command economic system?
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Which of the following best describes the role of the government in a command economy?
Which of the following best describes the role of the government in a command economy?
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In what scenario is direct democracy considered impractical?
In what scenario is direct democracy considered impractical?
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In a command economy, how are non-valuable resources typically managed?
In a command economy, how are non-valuable resources typically managed?
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According to the content, which of the following is a potential drawback of representative democracy?
According to the content, which of the following is a potential drawback of representative democracy?
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Which of the following reflects a common belief about the general populace in representative democracy?
Which of the following reflects a common belief about the general populace in representative democracy?
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Which of the following countries is an example of a command economy?
Which of the following countries is an example of a command economy?
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What can lead to the establishment of a command economy in certain countries?
What can lead to the establishment of a command economy in certain countries?
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What is one example of a direct democracy mentioned in the content?
What is one example of a direct democracy mentioned in the content?
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Which Latin phrase best reflects the essence of democracy as described in the content?
Which Latin phrase best reflects the essence of democracy as described in the content?
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How do market outcomes in a command economy typically compare to those in a free market?
How do market outcomes in a command economy typically compare to those in a free market?
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What is the primary purpose of tariffs?
What is the primary purpose of tariffs?
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How do unit tariffs differ from ad valorem tariffs?
How do unit tariffs differ from ad valorem tariffs?
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What significant impact can high corporate taxes have on a country's economy?
What significant impact can high corporate taxes have on a country's economy?
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What effect do tariffs have on the availability of suppliers for imported products?
What effect do tariffs have on the availability of suppliers for imported products?
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What is a potential consequence of low competition due to high tariffs?
What is a potential consequence of low competition due to high tariffs?
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How does a 1% increase in corporate income tax affect economic output?
How does a 1% increase in corporate income tax affect economic output?
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Why might complex tax systems deter foreign investment?
Why might complex tax systems deter foreign investment?
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What is one potential outcome of a 1% reduction in corporate income tax?
What is one potential outcome of a 1% reduction in corporate income tax?
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What is the primary characteristic of a command economy?
What is the primary characteristic of a command economy?
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How does communism differ from socialism?
How does communism differ from socialism?
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In a communist system, who makes the decisions about resource utilization?
In a communist system, who makes the decisions about resource utilization?
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What scenario illustrates the principle of communism regarding private property?
What scenario illustrates the principle of communism regarding private property?
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What does socialism allow compared to communism?
What does socialism allow compared to communism?
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What is a key principle behind the distribution of resources in a market economy?
What is a key principle behind the distribution of resources in a market economy?
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Under communism, what is the government's goal regarding resource allocation?
Under communism, what is the government's goal regarding resource allocation?
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What happens to individual entrepreneurship under a strict communist regime?
What happens to individual entrepreneurship under a strict communist regime?
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What defines an economic system?
What defines an economic system?
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Which of the following countries operates under a free market system?
Which of the following countries operates under a free market system?
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What is a primary characteristic of a socialist economic system?
What is a primary characteristic of a socialist economic system?
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Which of the following represents a potential threat to a global business venture in a communist country?
Which of the following represents a potential threat to a global business venture in a communist country?
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What should be considered when identifying opportunities in a socialist country?
What should be considered when identifying opportunities in a socialist country?
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In the context of international business, what is a significant risk of exporting to a communist country?
In the context of international business, what is a significant risk of exporting to a communist country?
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What is a key advantage of using resources like the CIA Factbook for market research?
What is a key advantage of using resources like the CIA Factbook for market research?
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Which of the following countries would be categorized as socialist?
Which of the following countries would be categorized as socialist?
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Study Notes
Government Intervention
- When governments intervene in markets, the outcomes differ from a free and competitive market model.
- Markets that are less than perfectly competitive (like monopolies) also result in different outcomes.
Command Economies
- A command economy features a centralized body, usually the government, controlling a large portion of economic activity.
- The government owns resources and businesses, dictates production, sets prices, and decides wages.
- Examples include North Korea and Cuba.
- Command economies are often associated with socialist or communist political systems.
- Historically, ancient Egypt and medieval manors demonstrate characteristics of command economies.
Democracy
- Democracy is a political system where citizens govern themselves either directly or indirectly.
- In direct democracies, citizens directly participate in decision-making.
- In representative democracies, citizens elect officials to represent them.
- Representative democracy is practical for larger populations.
Bribery
- Bribery is criminalized in many countries, including Canada (since 1998).
- In some regions, bribery is still considered acceptable business practice.
Tariffs
- Tariffs are taxes or trade barriers used to protect local businesses from foreign competition.
- They aim to encourage domestic consumption.
- Tariffs can be used as a form of protectionism.
- Tariffs are imposed by customs officers on goods arriving at borders.
- They are typically paid by buyers.
- There are different types of tariffs: unit tariffs (set dollar amount per item) and ad valorem tariffs (based on imported goods' value).
- Tariffs can impact supply chains, potentially reducing suppliers, raising prices, and affecting product quality.
- International trade issues can escalate into a "tariff war" with increased restrictions and tensions.
Taxes
- Taxes significantly influence business and investor decisions.
- Competitive tax rates are crucial for attracting investment and stimulating economic growth.
- Excessive or complex taxes can deter foreign investment and domestic investment.
- High taxes increase administrative costs for businesses.
- Corporate and shareholder taxes can hinder economic growth and capital accumulation.
Communism
- Communism is a command economy where the government owns all factors of production and controls all economic decisions.
- The government determines resource allocation and industry operation.
- There is no private ownership of resources or businesses.
- The focus is on collective benefit, rather than individual gain.
- The government decides how resources are utilized, including capital distribution.
Socialism
- Socialism can be considered a moderated form of communism.
- It involves government control of key industries while allowing some individual ownership of property and small businesses.
Comparing Communism and Socialism
-
Communism:
- Government owns all production factors.
- Government makes all economic decisions.
- No individual ownership.
- Emphasis on collective good.
-
Socialism:
- Government controls key industries.
- Allows individual ownership of property and small businesses.
- Individual freedom is limited.
- Primarily focused on equality.
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Description
Explore the impact of government intervention on markets and economic systems in this quiz. Learn about command economies and their characteristics, as well as the fundamentals of democracy and its variations. Test your understanding of how different political systems affect economic activities.
