Podcast
Questions and Answers
Which method primarily determines what is produced in a pure market economy?
Which method primarily determines what is produced in a pure market economy?
What role does the government play in a pure command economy?
What role does the government play in a pure command economy?
Which of the following best describes a pure traditional economy?
Which of the following best describes a pure traditional economy?
Which component is not a characteristic of a pure market economy?
Which component is not a characteristic of a pure market economy?
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In a mixed or modified market economy like Canada’s, what influences economic decisions apart from market forces?
In a mixed or modified market economy like Canada’s, what influences economic decisions apart from market forces?
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Who primarily decides how goods and services are produced in a pure market economy?
Who primarily decides how goods and services are produced in a pure market economy?
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Which objective is NOT typically associated with a well-functioning economy?
Which objective is NOT typically associated with a well-functioning economy?
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What are the three major questions that every society must answer regarding its economy?
What are the three major questions that every society must answer regarding its economy?
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Study Notes
Three Major Economic Questions
- Societies face scarcity: Wants exceed available resources
- Three major questions guide resource allocation:
- What to produce?
- How to produce it?
- Who receives what is produced?
Answering the Three Major Questions
-
Tradition/Custom:
- Customs and traditions dictate economic activity.
- Answers the "What," "How," and "Who" questions.
- Discourages change and growth.
- Provides economic, social, and political stability.
-
Government (Command):
- Central authority (government) decides on resource allocation.
- Government controls factors of production and decides on production and distribution.
- Answers the "What," "How," and "Who" questions.
-
Market:
- Buyers and sellers interact freely, driven by self-interest and competition.
- Consumers' "dollar votes" determine what is produced ("What").
- Competition among producers determines how goods are produced ("How").
- Consumers with purchasing power receive the goods and services ("Who").
Model Economies
- Pure Traditional Economy: Reliance on customs and traditions to answer economic questions.
- Pure Command Economy: Complete government control over economic decision-making.
- Pure Market Economy: Free market forces, driven by supply and demand, dictate economic outcomes.
The Economy of Canada
- Mixed Economy: Canada operates primarily as a market economy, but with significant government influence.
- Market Forces: Consumer choices drive the "What," "How," and "Who" decisions.
- Government Influence: Government intervention and regulations shape economic activity.
- Tradition: Cultural and family traditions influence economic choices.
Objectives of the Canadian Economy
- Full employment: Low unemployment rates.
- Stable prices: Control over inflation.
- Balance of trade: Exports matching imports.
- Economic growth: Expansion of the economy's output.
- Economic justice: Fair distribution of wealth and opportunities.
- Economic freedom: Freedom of choice in economic activities.
- Economic efficiency: Maximizing output with available resources.
- Reasonable level of federal and provincial debt: Maintaining manageable government debt.
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Description
Explore the three major economic questions that societies face regarding resource allocation. This quiz examines how tradition, government, and market systems respond to these questions. Test your knowledge on how different systems determine what to produce, how to produce it, and who receives the products.
