Chapter 2 Quiz

An economic system where the what, how, and for whom questions are answered by custom, ritual, and habit.

• Traditional

• Market

• Command

• Modern Socialism

An economic system where the government answers the what, how, and for whom questions.

• Traditional

• Market

• Command

• Modern Socialism

An economic system where individuals and firms act in their own best interest to answer the what, how, and for whom questions.

• Traditional

• Market

• Command

• Modern Socialism

What are the strengths of the market economy? (Check all that apply)

• The freedom to buy, sell, and produce what you want.

• Decentralized decision making.

• Variety of goods leading to high consumer satisfaction.

• Many public services are available at low or no cost.

• It preserves culture and customs.

What are the weaknesses of the market economy? (Check all that apply)

• It does not provide for everyone, such as those too young, old, or sick to earn a living.

• It may not provide for essential goods and services that are not as profitable.

• There is uncertainty in the system, and the possibility of a market failure.

• It does not meet the needs and wants of the consumer.

• Lacks effective incentives for people to work.

Why did Sweden move from socialism to a more mixed economy in the 1980's?

• Its citizens objected to the nation's high rate of taxation.

• Its citizens demanded that elements of communism be adopted.

• Its government decided that welfare and health benefits were no longer needed.

• Its government decided that opening the country's petroleum industry would boost the economy.

Which of the following statements best describes the communist ideal?

• A classless society in which everyone works for the common good.

• A classless society in which workers are motivated by financial incentives.

• A society in which the working class is motivated to produce goods.

• A society in which a small ruling class administers resources for the common good.

Which of these is an accurate statement about mixed economies today?

• There are more mixed economies in the world than any other kind.

• Very few economies today can be described as mixed.

• Mixed economies exist mostly in nations with communist governments.

• Most nations that once had a mixed economy have evolved into command economies.

Mixed economies work to the degree that they embrace democracy.

• True

• False

Who did Karl Marx believe would be the beneficiaries of socialism?

• property owners

• the government

• workers

• capitalists