What is the Economy?

What is an economy and why is it important?

• A system for organizing how goods and services are produced and used

• A type of transportation system

• A rule about saving money

• A law that helps people get jobs

How does a producer help the economy?

• By making and selling goods and services

• By buying everything in a store

• By only using natural resources

• By working in a government job

Why are consumers important in an economy?

• They create new businesses

• They buy and use goods and services, helping businesses grow

• They make all economic decisions

• They stop businesses from selling products

How is a free enterprise system different from a command economy?

• In free enterprise, people decide what to sell, but in command economies, the government controls businesses

• In both systems, the government makes all decisions

• Free enterprise does not allow people to start businesses

• Command economies let business owners do whatever they want

What happens in a market economy when there is high demand for a product?

• Prices usually go up

• Prices drop to zero

• No one buys the product

• The product disappears

Why do governments control parts of a mixed economy?

• To make sure businesses follow laws and to protect workers and consumers

• To shut down private businesses

• To stop people from selling things

• To increase prices of all products

Why do some businesses outsource jobs to other countries?

• To reduce costs and increase productivity

• To stop workers from being productive

• To make jobs harder to find

• To make businesses smaller

What is an example of innovation in an economy?

• A company creating a faster way to produce goods

• A company selling the same product forever

• A business stopping production

• A store selling only one item

How do imports and exports affect a country’s economy?

• Imports bring goods into the country, while exports sell goods to other countries, creating trade opportunities

• Imports and exports do not affect the economy

• Only exports are important for economic growth

• Imports stop businesses from selling products

How does the division of labor help a business?

• It allows workers to focus on one task, making production faster and more efficient

• It forces workers to do every job in the company

• It slows down business growth

• It makes work harder for everyone