Review Chapter 2 and 18

Review Chapter 2 and 18
Bring a pencil with you for the test tomorrow!
1. Capitalism : market economy in which private citizens own the factors of
2. Command economy : economy in which a central authority makes most of the
WHAT, HOW, and FOR WHOM decisions
3. Economic system: Organized way in which a society provides for the wants and
needs of its people
4. Fixed Income: income that does not increase even if price goes up
5. Full Employment : The result of providing as many jobs as possible
6. Inflation: A rise in the general level of prices
7. Mixed Economy: Another name for a modified private enterprise economy
8. Modified private enterprise economy
9. Private Property: The concept that people have the right to control their
possessions as they wish
10. Profit motive The driving force that encourages people and organizations to
improve their material well being
11. Social Security: Federal program that provides disability and retirement benefits
12. Traditional economy: Economic activities stem from ritual, habit, or custom
13. Voluntary exchange: acts of buyers and sellers freely and willingly engaging in
market transactions
14. Refusing a job applicant on the basis of race, gender, age, or any other reason is
a. Discrimination
15. What does the American government protect consumers against? (Hint: look at
the characteristics of a free enterprise and capitalism)
a. False advertising
16. Government agencies make choices in a ___________________economy.
a. Command Economy
17. What are the advantages of a market economy?
a. Able to adjust to change
b. Individual Freedoms
c. Decentralized decision making
d. Variety of goods and services
e. Consumer satisfaction
18. People on a _______________________ are affected the most when inflation
a. Fixed income; they have a Declining purchasing power
19. What power do consumers have in the market?
a. Consumer sovereignty
20. Identify the seven economic and social goals. What category does minimum
wage fall into?
a. Economic Equality
21. Consumers determine the production of product in a ________________
a. Market
22. What is the role of the government in a command economy?
a. To answer What to Product, How to produce, for whom to produce
23. What are the benefits of Entrepreneurships?
a. Higher profits, newer businesses, higher paying jobs
b. You are your own boss
24. Which characteristic of capitalism encourages people to work, save, and invest?
a. Ability to own private property
25. When CHANGE happens, what advantage does a market economy have over a
command economy?
a. Gradual; changes happen in a short period of time
26. Who is the “father” of communism?
a. Karl Marx
27. Who led the Bolsheviks in the Russian Revolution of 1917?
a. Lenin
28. What are the advantages workers have in a command economy?
a. Job security
29. Stalin’s _____________________ wanted rapid industrialization in Russia. What
was the plan called in China?
a. Five Year Plan
b. Great Leap Forward
30. Which Soviet leader encouraged privatization?
a. Lenin
b. Gorbachev
31. What problems will command economies face when transitioning to a market
a. Learn to live with new incentives, struggle for political power,
privatization of industry
32. What is one of the most remarkable phenomena’s of the late 20th century (in
a. Capitalism
33. Under _______________ property is collectively owned. (communism, socialism,
or capitalism)
a. Communism
34. What are the advantages of socialism?
a. Guaranteed jobs and ownership of all productive resources
35. The United States is a mixed economy. Which two economic systems are
“combined” to create a mixed Economy?
36. Identify the following countries as Traditional, Command, or Market/mixed
a. North Korea
b. China
c. Inuit
d. Mexico
e. Poland
f. Hong Kong
g. Taiwan