EKN 110 - CHAPTER 2 CORRECT 100%

EKN 110 - CHAPTER 2 CORRECT
100%
Economic systems - ANSWERa particular set of institutional arrangements and a
coordinating mechanism to respond to the problem of scarcity

Market system (capitalism) - ANSWERprivate ownership of resources and the use of
markets and prices to coordinate and direct economic activity with a mixture of
centralized economic initiatives

Markets - ANSWERmeeting place where buyers and sellers come together to
determine prices

Characteristics of the market system - ANSWER1. Private Property
2. Freedom of Enterprise and Choice
3. Self Interest
4. Competition



4 Economic system role players - ANSWER-Households
-Firms
-Government
-Foreign sector

Circular flow diagram - ANSWERa visual model of the economy that shows how
dollars flow through markets among households and firms

Laissez-faire capitalism - ANSWERan economic system in which the means of
production and distribution are privately owned and operated for profit with minimal
or no government interference

Government's role in Laissez-faire capitalism - ANSWER-Protecting private property
-Establishing a legal environment

Command system - ANSWERAn economic system in which the government owns
most property resources, and economic decision making is set by a central
economic plan created a nd enforced by the government.

Problems with command system - ANSWER-coordination problem
-incentive problem

private property - ANSWERproperty owned by individuals or companies, not by the
government or the people as a whole