Econ Unit 1 Review

What is the primary characteristic of a command economy?

• Prices determined by supply and demand

• Government dictates production and distribution

• High levels of poverty and illiteracy

• Minimal government intervention

In a traditional economy, which of the following is most likely true?

• Innovation drives production decisions

• Custom and history influence resource allocation

• Governments heavily regulate markets

• Income inequality is a defining feature

Which of the following best describes a mixed economy?

• A) A balance between market freedom and government intervention

• B) A system focused solely on private ownership

• C) No government involvement in the economy

• D) High degree of poverty and reliance on traditions

Which of the following economic systems is characterized by laissez-faire policies?

• Traditional Economy

• Command Economy

• Free Market Economy

• Mixed Economy

Which of the following is a con of market economies?

• High degree of predictability and security

• Lack of competition

• Increased income inequality

• Governmental control of resources

What is a significant drawback of a command economy as discussed in the document?

• Excessive innovation

• Denial of basic human rights and freedoms

• High degree of income inequality

• Over-reliance on customs and traditions

The concept of "Circular Flow" in a market economy involves interactions between which entities?

• Households and the government

• Firms and the government

• Households and firms

• Firms and international markets

Why do traditional economies typically exhibit lower life expectancy?

• Lack of private ownership

• Little change or innovation in production methods

• Government regulation of resources

• Competitive markets

Which of the following economic systems is most likely to result in the elimination of social classes (in theory)?

Why might competition in a market economy be considered a harmful force?

• It limits innovation

• It increases government control

• It leads to higher income inequality

• It reduces consumer choices