Economic Systems Exam Questions And Correct Answers.

An economy that is centrally operated by the government, which prohibits personal property, decides what is made, and controls prices and supplies. The government owns all of the property and tries to promote equality. There is no profit incentive. - Answer Command economy Why are command economies inefficient? - Answer There is no profit incentive and no competition. Citizens can't get a raise or be fired, so there is little incentive to innovate, to create new products, or improve existing ones. T/F: Shortages are common in command economies - Answer True T/F: A pure market economy has never existed - Answer True An economy driven by the choices of producers and consumers where no government intervention is involved. It is pure capitalism. They promote free economic choices. It allows free interaction. - Answer Pure market economy/market economy Which economies are the two extremes? - Answer Command and market economy Which economy is pure capitalism? - Answer Market economy An economy that is a combination of command and pure market economy is. The government has some control over the economy and producers and consumers play a role in economic decisions. It has as little regulation as possible - Answer Mixed market economy T/F: There are no 100% market economies and no 100% command economies - Answer True Communism and socialism are usually found in what type of economic system? - Answer Command/planned What economy does the US have? - Answer mixed market economy And economy based on traditions or customs have a family or community with centers on bartering or trading being typical. Money is not used. Hunting, gathering, and farming are practiced. They preserve traditional customs - Answer Traditional economy