Chapter 2 - Review

In which type of economy does a central authority make all economic decisions?

• Traditional economy
• Command economy
• Mixed economy
• Free market economy

What is a defining characteristic of a free market economy?

• The government regulates all prices and production levels.
• Economic activities are determined by consumer preferences and voluntary exchanges.
• Production is based solely on traditional practices.
• All economic decisions are made by a central authority.

Which of the following best illustrates the concept of a traditional economy?

• A community that relies on modern technology for agriculture.
• An economy driven by competition and consumer choice.
• A society where economic decisions are based on community and custom.

• A system where the government controls all production and distribution.

What is a common feature of traditional economies?

• They are characterized by extensive government regulation.
• They prioritize meeting the basic needs of the community.
• They focus on maximizing profits and surplus production.
• They rely heavily on advanced technology and innovation.

What is a defining feature of a traditional economy?

• It often employs simple tools and techniques.
• It focuses on maximizing profit and competition.
• It is characterized by significant government control.
• It relies on advanced technology for production.

What is a key characteristic of a free market economy?

• Government sets all prices and production levels.
• Economic decisions are made based on historical patterns.
• All economic activities are communal and family-oriented.
• Supply and demand dictate production and pricing.

Which of the following best exemplifies a free market economy?

• A school cafeteria with a fixed menu set by the administration.
• A community garden where everyone shares the harvest.
• A government-run factory producing goods for the state.
• A local farmer's market where prices are set by sellers.

Which statement accurately describes a free market economy?

• The government controls all aspects of production.
• Consumers have the power to influence production decisions.
• Economic activities are based solely on tradition.
• Prices are fixed by a central authority.

Which of the following countries is often cited as an example of a mixed economy?

• North Korea
• Cuba
• Somalia
• United States

What is the primary focus of a command economy?

• Encouraging innovation and technological advancement.
• Maximizing consumer choice and competition.
• Promoting traditional practices and customs.
• Achieving specific social and economic objectives through government control.