Understanding Economic Systems

What are the three fundamental questions that an economic system answers?

• What is the best way to invest, who should invest, and why?

• How do we save resources, who should save them, and where?

• How much money should be printed, who should print it, and when?

• What do we produce, how do we produce it, and who receives it?

In a market economy, what primarily determines the production of goods and services?

• Environmental policies

• International trade agreements

• Consumer purchasing patterns

• Government regulations

Which of the following is a disadvantage of a market economy?

• Efficient resource allocation

• Innovation and economic growth

• Monopolies

• More choices for consumers

In a command economy, who decides what goods should be produced?

• Consumer demand

• International organizations

• The government

• Private companies

What is one advantage of a command economy?

• Low unemployment levels

• Abundance of public goods

• High levels of innovation

• Efficient resource allocation

What is a characteristic of a mixed economy?

• Combination of private and state ownership

• No government intervention

• All sectors are privately owned

• All sectors are state-controlled

Which sector is commonly state-controlled in a mixed economy?

• Tourism

• Technology

• National defense

• Retail

Why did the US government take a stake in AIG during the financial crisis?

• To reduce unemployment

• To increase its profits

• To nationalize the insurance industry

• To prevent economic collapse

How are economic systems and political ideologies connected?

• They are only connected in democratic countries

• They are completely independent

• Economic systems dictate political ideologies

• Political ideologies influence economic systems

What determines the best economic system for a country?

• A comprehensive understanding of the country's context

• The country's cultural background

• The country's legal system

• The country's level of economic development