Name: ______________________ Class: _________________ Date: _________
Matching a.
economic system b.
factor payments c.
safety net d.
traditional economy e. standard of living f.
profit g. innovation h. economic freedom
____ 1. the method used by a society to produce and distribute goods and services
____ 2. the income people receive for supplying factors of production
____ 3. a system to protect people experiencing unfavorable economic conditions
____ 4. the level of economic prosperity
____ 5. the process of bringing new methods, products, or ideas into use
____ 6. an economy that relies on habit, custom, or ritual to answer economic questions
ID: A a.
communism b.
authoritarian c.
socialism d.
centrally planned economy
____ 7. a major goal of socialist economies
____ 8. another name for a centrally planned economy e. command economy f.
economic equity g. traditional economy h. capitalism
____ 9. an economy in which the government answers the key economic questions
____ 10. requiring strict obedience to a state or leader
____ 11. a political system with a centrally planned economy that owns all resources and means of production
____ 12. a political system based on the belief that wealth should be evenly distributed throughout a society a.
laissez-faire b.
free enterprise system c.
mixed economy d.
economic transition e. privatization f.
government intervention g. private property h. economic freedom
____ 13. the doctrine that government generally should not intervene in the marketplace
____ 14. a market-based economic system with some government involvement
____ 15. property owned by individuals or companies
____ 16. period of change in which an economy moves from one economic system to another
1

Name: ______________________ ID: A
____ 17. an economic system in which private individuals or corporations own capital goods
____ 18. the selling of state-run firms, which are then allowed to compete in the marketplace
Completion
Complete each statement.
19. An arrangement that allows buyers and sellers to exchange things is a(n) _______.
20. The arena of exchange where firms purchase factors of production is called the _______.
21. An individual’s own personal gain is _______.
22. The hope of reward that encourages a person to behave in a certain way is a(n) _______.
23. The fact that consumers have the power to decide what gets produced is called _______.
Multiple Choice
Identify the choice that best completes the statement or answers the question.
____ 24. Which of the following is a summary of the three key economic questions?
a.
Who will buy which goods and services, and how much will they pay?
b.
How, when, and from whom should comsumers get what they want?
c.
When, where, and by whom should goods and services be produced?
d.
What goods and services should be produced, how, and for whom?
____ 25. Each society answers the three basic economic questions based on a.
its unique combination of values and goals.
b.
the number of factor payments.
c.
its degree of economic growth.
d.
the desire to achieve economic freedom.
____ 26. The ways in which factors of production are combined determines the answer to which economic question?
a.
What will be produced?
b.
How will goods be produced?
c.
Who will consume goods?
d.
How can we provide a safety net?
____ 27. Which of the following might a government provide as part of a safety net for the people?
a.
general elections every four years b.
unemployment compensation c.
a strong military defense d.
regulation of commerce
2

Name: ______________________ ID: A
____ 28. A town votes to raise taxes on its households and businesses in order to renovate a school in one of its poorest neighborhoods. What societal goal best explains rhis decision?
a.
freedom b.
efficiency c.
growth d.
equity
____ 29. To improve its standard of living, a nation’s economy must a.
remain stable.
b.
grow through innovation.
c.
reach economic equity.
d.
allow the central government to make economic decisions.
____ 30. Traditional economies are usually a.
small, close communities that welcome change and new technology.
b.
large, widespread communities that welcome change and new technology.
c.
large, widespread communities that are able to deal effectively with environmental disaster.
d.
small, close communities that avoid change and new technology.
____ 31. Which of the following is a characteristic of a traditional economy?
a.
It encourages innovation and change. b.
It is usually based on light industrial production.
c.
It has a high standard of living.
d.
It revolves around the family unit.
____ 32. An economy in which all the boys become farmers when they are adults, just as their fathers and grandfathers did, would be an example of a a.
free market economy b.
command economy c.
traditional economy d.
centrally planned economy
____ 33. Why do people need to buy and sell products or services?
a.
People need to buy and sell products to make a profit.
b.
We need to maintain a competitive society.
c.
No one is self-sufficient.
d.
People need to provide the market with goods and services.
____ 34. What does the process of specialization do for an economy?
a.
It eliminates unemployment.
b.
It makes production more efficient.
c.
It fosters competition.
d.
It makes labor easier to control.
____ 35. Who owns the factors of production?
a.
individuals b.
households c.
firms d.
the market
3

Name: ______________________ ID: A
____ 36. On which arrow(s) would weekly grocery shopping fall?
a.
a and b b.
a c.
c d.
a and d
____ 37. Which of the following best describes the physical flow from households to firms shown in the diagram ?
a.
interest and profits b.
labor and land c.
goods and services d.
wages and salaries
____ 38. What is the product market?
a.
the market in which income is received for supplying land, labor, or capital b.
the market in which governments collect taxes from firms and consumers c.
the market in which firms purchase the factors of production from households d.
the market in which households purchase the goods and services that firms produce
____ 39. How will consumers react to the incentive of a higher price on a good or service?
a.
The negative incentive will cause consumers to purchase less of the good or service. b.
The positive incentive will cause consumers to purchase less of the good or service. c.
The negative incentive will cause consumers to purchase more of the good or service. d.
The positive incentive will cause consumers to purchase more of the good or service.
4

Name: ______________________
____ 40. What “invisible hand” regulates the free market economy?
a.
incentive and efficiency b.
specialization c.
competition between firms d.
competition and self-interest
____ 41. Why are free market economies able to attain economic growth?
a.
Consumers can purchase all the goods they need, which causes firms to produce more.
b.
Competition encourages innovation, which causes growth.
c.
Everyone is acting in their own self-interest, which motivates market growth.
d.
Firms keep producing incentives to encourage households to purchase more goods.
____ 42. Which of the following is the main incentive for a manufacturer to sell a product?
a.
making profits on sales b.
putting others out of business c.
pleasing the consumer d.
helping the economy grow
____ 43. What is one of the most important advantages of a free market?
a.
It distributes goods equally.
b.
It protects the less fortunate.
c.
It is easy to regulate.
d.
It encourages growth.
____ 44. What does the expression “the customer is king” mean in a free market economy?
a.
In a service economy, the customer is always right.
b.
Customers have the power to decide what gets produced.
c.
People with the most money are treated like royalty.
d.
Producers of goods are also customers.
Main Ideas
Directions: Write the letter of the correct answer in the blank provided.
____ 45. Which of the following is characteristic of a centrally planned economy?
a.
The central government enforces laissez-faire policies.
b.
The central government makes all economic decisions.
c.
The central government lets factories set their own goals. d.
The central government allows the market to set wages for jobs.
____ 46. In what kind of an economy does the government make all the decisions?
a.
mixed b.
laissez-faire c.
centrally planned d.
free enterprise
____ 47. A socialist society has a more flexible command economy than a communist society because a.
some free market practices can combine with central economic planning.
b.
the central government has all economic and political power.
c.
an authoritarian government controls the economy.
d.
the centers of economic power are all under private control.
ID: A
5

Name: ______________________ ID: A
____ 48. A person who believes that wealth should be evenly distributed throughout society is a.
a socialist.
b.
a communist.
c.
a capitalist.
d.
an entrepreneur.
____ 49. How did heavy industry in the Soviet Union avoid the competition that drives a free market economy?
a.
The government discouraged competition by determining prices, wages, and products.
b.
The government used profit as an incentive to entrepreneurs.
c.
Farms were not in direct competition with heavy industry.
d.
The government banned the production of consumer goods.
____ 50. Why might the Soviet planners have favored heavy industry over the makers of consumer goods?
a.
The products of heavy industry brought in more money.
b.
There were more people trained to work in heavy industry.
c.
Consumer goods are not good economic investments.
d.
The products of heavy industry provide material for many other industries.
____ 51. How is the economic system in China today different from the one in Soviet Russia?
a.
The Chinese government owns firms in major industries.
b.
The Chinese government allows far more economic freedom.
c.
The Chinese government is socialist, rather than communist.
d.
The Chinese government is not authoritarian.
____ 52. How could the Chinese economy be characterized?
a.
free market b.
centrally planned c.
mixed, but more centrally planned d.
mixed, but more like a free market
____ 53. What two systems were linked in the Soviet Union and China?
a.
the free market and capitalism b.
socialism and democracy c.
communism and central planning d.
traditional economy and authoritarianism
____ 54. Which of the following might be a positive aspect of centrally planned economies?
a.
low unemployment due to guaranteed jobs b.
high levels of consumer satsfaction c.
quick adjustment to changing conditions d.
incentives for workers to be innovative
____ 55. What might be a hardship for citizens of a centrally planned economy making a transition to a free market economy?
a.
Farmers would have to grow the crops that the government instructed them to.
b.
Only poor quality goods would become available to consumers.
c.
Workers would lose job security and guaranteed incomes.
d.
Entrepreneurs would have fewer opportunities to start new businesses.
6

Name: ______________________ ID: A
____ 56. Which of the following philosophers argued that a free market would regulate itself with little government involvement?
a.
Karl Marx b.
Adam Smith c.
Vladimir Lenin d.
Friedrich Engels
____ 57. Government intervention in a modern economy is useful because a.
the needs and wants of a modern society are always met by the marketplace.
b.
the marketplace has many incentives to create public works such as parks.
c.
governments are more able to meet some needs and wants of modern society.
d.
free market principles do not encourage growth.
____ 58. The diagram shows money flowing to the government from firms and households in a mixed economy.
How would you label points a and c on the diagram?
a.
labor b.
taxes c.
government-owned factors d.
government purchases
7

Name: ______________________ ID: A
____ 59. Which of the following would be part of the flow indicated by the arrow labeled “b”? a.
smoke alarms for senators’ offices b.
Secret Service salaries c.
import taxes paid by foreign firms d.
Social Security checks
____ 60. In which of the following lists of mixed economies does the free market system dominate?
a.
France, Canada, South Africa, United Kingdom b.
United States, United Kingdom, Singapore, Hong Kong c.
Cuba, Greece, China, United States d.
Russia, Peru, France, Canada
____ 61. The United States economy is a mixed economy a.
based on a traditional economy, but allowing some government intervention.
b.
based on a centrally planned economy, but limiting government intervention.
c.
based on a free market, allowing no government intervention.
d.
based on a free market, but allowing some government intervention.
____ 62. The main difference between the economies of China and North Korea is that a.
North Korea does not have a centrally-planned economy.
b.
North Korea has begun to introduce free market practices.
c.
China is privatizing state-run businesses.
d.
China does not allow ownership of private property.
8

Name: ______________________ ID: A
____ 63. The United States government intervenes in the economy in order to a.
provide competition for private firms.
b.
impose barriers on foreign trade.
c.
promote the general welfare.
d.
protect laissez-faire.
____ 64. Which of the following best describes the economy of the United States?
a.
free market b.
centrally planned c.
mixed, but more centrally planned d.
mixed, but more like a free market
Short Answer: You MUST answer TWO QUESTIONS for FIVE POINTS EACH. Additional correct answers earn one point of extra credit.
65. How do societal values influence a country’s economic policies? Use an example to illustrate your point.
Critical Thinking and Writing
Directions: Use complete sentences to answer the following questions.
66. Why do markets exist?
67. How might the experiences of the Soviet Union and China show that centrally planned economies have some fundamental problems?
9

Name: ______________________ ID: A
68. List the following countries in order, starting with the most centrally planned and ending with the most free market: China, North Korea, Singapore, South Africa, United States. Name and give examples of two types of government intervention that you considered as you compared these countries.
69. The economy of China is in transition. What does this mean?
10

ID: A
MATCHING
1. ANS: A PTS: 2 DIF: L3 REF: A.23
OBJ: 2.1.1 Identify the three key economic questions that all societies must answer
TOP: Economic Systems | Defining an Economic System
2. ANS: B PTS: 2 DIF: L3 REF: A.25
OBJ: 2.1.1 Identify the three key economic questions that all societies must answer
TOP: Economic Systems | Factor Payments
3. ANS: C PTS: 2 DIF: L3 REF: A.26
OBJ: 2.1.2 Analyze the societal values that determine how a country answers the three economic questions. STA: B.2 TOP: Economic Systems | Safety Net
4. ANS: E PTS: 2 DIF: L3 REF: A.27
OBJ: 2.1.2 Analyze the societal values that determine how a country answers the three economic questions. STA: B.2 TOP: Economic Systems | Standard of Living
5. ANS: G PTS: 2 DIF: L3 REF: A.27
OBJ: 2.1.2 Analyze the societal values that determine how a country answers the three economic questions. STA: B.2 TOP: Economic Systems | Innovation
6. ANS: D PTS: 2 DIF: L3 REF: A.28
OBJ: 2.1.3 Define the characteristics of a traditional economy.
TOP: Economic Systems | Traditional Economy
7. ANS: F PTS: 2 DIF: L3 REF: A.34
OBJ: 2.3.2 Distinguish between socialism and communism. STA: F.3
TOP: Economic Systems | Economic Equity
8. ANS: E PTS: 2 DIF: L3 REF: A.35
OBJ: 2.3.1 Describe how a centrally planned economy is organized.
TOP: Economic Systems | Command Economy
9. ANS: D PTS: 2 DIF: L3 REF: A.35
OBJ: 2.3.1 Describe how a centrally planned economy is organized.
TOP: Economic Systems | Centrally Planned Economy
10. ANS: B PTS: 2 DIF: L3 REF: A.36
OBJ: 2.3.2 Distinguish between socialism and communism. STA: F.3
TOP: Economic Systems | Authoritarianism
11. ANS: A PTS: 2 DIF: L3 REF: A.36
OBJ: 2.3.1 Describe how a centrally planned economy is organized.
TOP: Economic Systems | Communism
12. ANS: C PTS: 2 DIF: L3 REF: A.36
OBJ: 2.3.2 Distinguish between socialism and communism. STA: F.3
TOP: Economic Systems | Socialism
13. ANS: A PTS: 2 DIF: L3 REF: A.40
OBJ: 2.4.4 Describe the role of free enterprise in the United States economy.
STA: B.2 TOP: Economic Systems | Laissez-Faire
1

ID: A
14. ANS: C PTS: 2 DIF: L3
OBJ: 2.4.1 Explain the rise of mixed economic systems.
TOP: Economic Systems | Mixed Economy
15. ANS: G PTS: 2 DIF: L3
OBJ: 2.4.1 Explain the rise of mixed economic systems.
TOP: Economic Systems | Private Property
REF: A.41
REF: A.41
16. ANS: D PTS: 2 DIF: L3 REF: A.43
OBJ: 2.4.3 Compare the mixed economies of various nations along a continuum between centrally planned and free market systems. STA: F.3
TOP: Economic Systems | Economic Transitions
17. ANS: B PTS: 2 DIF: L3 REF: A.43
OBJ: 2.4.4 Describe the role of free enterprise in the United States economy.
STA: B.2 TOP: Economic Systems | Free Enterprise
18. ANS: E PTS: 2 DIF: L3
OBJ: 2.4.1 Explain the rise of mixed economic systems.
REF: A.43
TOP: Economic Systems | Privatization
COMPLETION
19. ANS: market
PTS: 2
STA: F.5
20. ANS: factor market
DIF: L3 REF: A.29
TOP: Economic Systems | Markets
OBJ: 2.2.1 Explain why markets exist.
PTS: 2 DIF: L3 REF: A.31
OBJ: 2.2.2 Analyze a circular flow model of a free market economy.
TOP: Economic Systems | Factor Market
21. ANS: self-interest
PTS: 2 DIF: L3 REF: A.33
OBJ: 2.2.2 Analyze a circular flow model of a free market economy.
TOP: Economic Systems | Self-interest
22. ANS: incentive
PTS: 2 DIF: L3 REF: A.33
OBJ: 2.2.2 Analyze a circular flow model of a free market economy.
TOP: Economic Systems | Incentives
23. ANS: consumer sovereignty
PTS: 2 DIF: L3 REF: A.34
OBJ: 2.2.4 Identify the advantages of a free market economy.
TOP: Economic Systems | Consumer Sovereignty
2

ID: A
MULTIPLE CHOICE
24. ANS: D
Every society must answer the three key economic questions:
What goods and services should be produced?
How should these goods and services be produced?
Who consumes these goods and services?
PTS: 3 DIF: L3 REF: A.23
OBJ: 2.1.1 Identify the three key economic questions that all societies must answer
TOP: Economic Systems | Key Economic Questions
25. ANS: A
Societies make decisions about who will consume what based on their values and goals.
PTS: 3 DIF: L3 REF: A.25
OBJ: 2.1.1 Identify the three key economic questions that all societies must answer
TOP: Economic Systems | Basic Economic Questions
26. ANS: B
Different methods of production involve different combinations of land, labor, and capital.
PTS: 3 DIF: L3 REF: A.25
OBJ: 2.1.1 Identify the three key economic questions that all societies must answer
TOP: Economic Systems | Factors of Production
27. ANS: B
Governments that want to protect the economic security of citizens may offer safety nets such as unemployment insurance.
PTS: 5 DIF: L4 REF: A.26
OBJ: 2.1.2 Analyze the societal values that determine how a country answers the three economic questions. STA: B.2 TOP: Economic Systems | Economic Security
28. ANS: D
The town wants to provide equal opportunities for learning to all students in the town.
PTS: 3 DIF: L3 REF: A.26
OBJ: 2.1.2 Analyze the societal values that determine how a country answers the three economic questions. STA: B.2 TOP: Economic Systems | Societal Goals
29. ANS: B
A nation’s economy must grow in order for its people to have more income.
PTS: 3 DIF: L3 REF: A.27
OBJ: 2.1.2 Analyze the societal values that determine how a country answers the three economic questions. STA: B.2 TOP: Economic Systems | Standard of Living
30. ANS: D
Traditional economies are usually found in small, close communities.
PTS: 3 DIF: L3 REF: A.28
OBJ: 2.1.3 Define the characteristics of a traditional economy.
TOP: Economic Systems | Traditional Economy
3

ID: A
31. ANS: D
In traditional economies, boys tend to take up the occupation of their fathers, while girls follow those of their mothers.
PTS: 3 DIF: L3 REF: A.28
OBJ: 2.1.3 Define the characteristics of a traditional economy.
TOP: Economic Systems | Traditional Economy
32. ANS: C
A traditional economy revolves around the family unit, with the boys tending to take up the occupations of their fathers, and the girls tending to follow those of their mothers.
PTS: 3 DIF: L3 REF: A.28
OBJ: 2.1.3 Define the characteristics of a traditional economy.
TOP: Economic Systems | Traditional Economy
33. ANS: C
No one can produce all the goods and services to meet all of his or her needs and wants.
PTS: 3
STA: F.5
DIF: L3 REF: A.29
TOP: Economic Systems | Markets
OBJ: 2.2.1 Explain why markets exist.
34. ANS: B
Specialization leads to efficient use of land, capital, and labor by concentrating productive efforts on a limited number of activities.
PTS: 3
STA: F.5
DIF: L3 REF: A.30
TOP: Economic Systems | Specialization
OBJ: 2.2.1 Explain why markets exist.
35. ANS: B
Households own the factors of production.
PTS: 3
STA: F.5
DIF: L3 REF: A.31 OBJ: 2.2.1 Explain why markets exist.
TOP: Economic Systems | Factors of Production
36. ANS: A
Households pay firms for goods; firms supply households.
PTS: 5 DIF: L4 REF: A.31
OBJ: 2.2.2 Analyze a circular flow model of a free market economy.
TOP: Economic Systems | Free Market Economy
37. ANS: B
In a free market economy, firms pay workers for labor and may buy or rent land.
PTS: 5 DIF: L4 REF: A.31
OBJ: 2.2.2 Analyze a circular flow model of a free market economy.
TOP: Economic Systems | Free Market Economy
38. ANS: D
The product market is the arena of exchange in which households buy goods and services from firms.
PTS: 3 DIF: L3 REF: A.31
OBJ: 2.2.2 Analyze a circular flow model of a free market economy.
TOP: Economic Systems | Product Markets
4

ID: A
39. ANS: A
Higher prices are a negative incentive that causes consumers to purchase less of a good or service.
PTS: 3 DIF: L3 REF: A.33
OBJ: 2.2.2 Analyze a circular flow model of a free market economy.
TOP: Economic Systems | Incentives
40. ANS: D
Competition and self-interest work together to regulate the marketplace.
PTS: 3 DIF: L3 REF: A.33
OBJ: 2.2.3 Describe the self-regulating nature of the marketplace.
NAT: 7.3 STA: F.5 TOP: Economic Systems | Invisible Hand
41. ANS: B
Competition encourages innovation, which helps economies grow.
PTS: 3 DIF: L3 REF: A.33
OBJ: 2.2.4 Identify the advantages of a free market economy.
TOP: Economic Systems | Free Market
42. ANS: A
The manufacturer has the incentive to sell more to make profits.
PTS: 3 DIF: L3 REF: A.33
OBJ: 2.2.3 Describe the self-regulating nature of the marketplace.
NAT: 7.3 STA: F.5 TOP: Economic Systems | Incentives
43. ANS: D
Because the competition fostered by a free market encourages innovation, free market economies encourage growth.
PTS: 3 DIF: L3 REF: A.34
OBJ: 2.2.4 Identify the advantages of a free market economy.
TOP: Economic Systems | Free Market Economy
44. ANS: B
Free market economies give customers a choice, and producers produce what customers choose to buy.
PTS: 3 DIF: L3 REF: A.34
OBJ: 2.2.4 Identify the advantages of a free market economy.
TOP: Economic Systems | Free Market Economies
45. ANS: B
In a centrally planned economy the government decides what items to produce, how to produce them, and who gets them.
PTS: 3 DIF: L3 REF: A.35
OBJ: 2.3.1 Describe how a centrally planned economy is organized.
TOP: Economic Systems | Centrally Planned Government
5

ID: A
46. ANS: C
In a centrally planned economy, the government, rather than individual producers and consumers, makes all decisions on the key economic questions.
PTS: 3 DIF: L3 REF: A.35
OBJ: 2.3.1 Describe how a centrally planned economy is organized.
TOP: Economic Systems | Centrally Planned Economy
47. ANS: A
A socialist society allows for some free market practices and does not require an authoritarian government.
PTS: 3 DIF: L3 REF: A.36
OBJ: 2.3.2 Distinguish between socialism and communism. STA: F.3
TOP: Economic Systems | Socialism and Communism
48. ANS: A
Socialists believe that to achieve economic equity, the government or the public as a whole should control the centers of economic power, and distribute wealth evenly throughout society.
PTS: 5 DIF: L4 REF: A.36
OBJ: 2.3.2 Distinguish between socialism and communism. STA: F.3
TOP: Economic Systems | Socialism
49. ANS: A
The Soviet government determined prices, wages, and products.
PTS: 3 DIF: L3 REF: A.37
OBJ: 2.3.4 Identify the disadvantages of a centrally planned economy.
TOP: Economic Systems | Central Planning
50. ANS: D
Heavy industry produces goods used in other industries.
PTS: 3 DIF: L3 REF: A.37
OBJ: 2.3.3 Analyze the use of central planning in the Soviet Union and China.
STA: A.3 TOP: Economic Systems | Heavy Industry
51. ANS: B
China allows far more economic freedom today than it did in the past.
PTS: 3 DIF: L3 REF: A.37
OBJ: 2.3.3 Analyze the use of central planning in the Soviet Union and China.
STA: A.3 TOP: Economic Systems | Chinese and Soviet Economies
52. ANS: C
China adopted central planning after the communist revolution, but has recently begun allowing greater economic freedom.
PTS: 5 DIF: L4 REF: A.37
OBJ: 2.3.3 Analyze the use of central planning in the Soviet Union and China.
STA: A.3 TOP: Economic Systems | Communism
6

ID: A
53. ANS: C
In both the Soviet Union and China, communist revolutions led to centrally planned economies.
PTS: 3 DIF: L3 REF: A.37
OBJ: 2.3.3 Analyze the use of central planning in the Soviet Union and China.
STA: A.3 TOP: Economic Systems | Communist Economies
54. ANS: A
Centrally planned economies guarantee jobs, so workers have job security.
PTS: 3 DIF: L3 REF: A.38
OBJ: 2.3.4 Identify the disadvantages of a centrally planned economy.
TOP: Economic Systems | Centrally Planned Economy
55. ANS: C
Unlike in free market economies, workers in centrally planned economies have job security and guaranteed wages.
PTS: 3 DIF: L3 REF: A.38
OBJ: 2.3.4 Identify the disadvantages of a centrally planned economy.
TOP: Economic Systems | Centrally Planned Economy
56. ANS: B
Early free market thinkers such as Adam Smith believed that, if left alone, the free market would provide the greatest benefit for consumers.
PTS: 3 DIF: L3 REF: A.39
OBJ: 2.4.1 Explain the rise of mixed economic systems.
TOP: Economic Systems | Free Market Economy
57. ANS: C
Some needs of modern society would be difficult to meet in the marketplace.
PTS: 3 DIF: L3 REF: A.40
OBJ: 2.4.1 Explain the rise of mixed economic systems.
TOP: Economic Systems | Government Intervention
58. ANS: B
In a mixed economy, the government collects taxes from both households and firms.
PTS: 5 DIF: L4 REF: A.40
OBJ: 2.4.2 Interpret a circular flow model of a mixed economy.
TOP: Economic Systems | Mixed Economies
59. ANS: A
The government purchases goods such as smoke alarms from businesses.
PTS: 5 DIF: L4 REF: A.41
OBJ: 2.4.2 Interpret a circular flow model of a mixed economy.
TOP: Economic Systems | Mixed Economies
7

ID: A
60. ANS: B
On a continuum of mixed economies, the free market dominates in the United Kingdom, Canada, United
States, Hong Kong, and Singapore.
PTS: 3 DIF: L3 REF: A.41
OBJ: 2.4.3 Compare the mixed economies of various nations along a continuum between centrally planned and free market systems. STA: F.3
TOP: Economic Systems | Mixed Economies
61. ANS: D
The U.S. economy is a mixed economy with a free market system and limited government intervention.
PTS: 3 DIF: L3 REF: A.43
OBJ: 2.4.3 Compare the mixed economies of various nations along a continuum between centrally planned and free market systems.
TOP: Economic Systems | U.S. Economy
STA: F.3
62. ANS: C
China is in economic transition and is privatizing state-run businesses.
PTS: 3 DIF: L3 REF: A.43
OBJ: 2.4.3 Compare the mixed economies of various nations along a continuum between centrally planned and free market systems. STA: F.3
TOP: Economic Systems | Privatization in China
63. ANS: C
The United States intervenes to promote the general welfare and provide vital services.
PTS: 3 DIF: L3 REF: A.43
OBJ: 2.4.3 Compare the mixed economies of various nations along a continuum between centrally planned and free market systems. STA: F.3 TOP: Economic Systems | Government
64. ANS: D
While the United States economy is a mixed system, the foundation of the economy is the free market, so the resulting economy is mixed, on the side of the free market.
PTS: 3 DIF: L3 REF: A.43
OBJ: 2.4.4 Describe the role of free enterprise in the United States economy.
STA: B.2 TOP: Economic Systems | United States Economy
SHORT ANSWER
65. ANS:
Possible response: Countries answer the three economic questions based in part on social values involving efficiency, freedom, security, equity, and growth. For example, countries create safety net programs because they value security and equity.
PTS: 5 DIF: L3 REF: A.25
OBJ: 2.1.2 Analyze the societal values that determine how a country answers the three economic questions. STA: B.2 TOP: Economic Systems | Societal Values
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ID: A
66. ANS:
Possible answer: People cannot produce everything they need by themselves. Markets allow people to buy what they need to consume and sell the specialized goods and services they produce.
PTS: 5
STA: F.5
DIF: L3 REF: A.29 OBJ: 2.2.1 Explain why markets exist.
TOP: Economic Systems | Why Markets Exist
67. ANS:
Central planning did not work in either country. The failure of central planning in the Soviet Union eventually helped bring about the end of communism. China is shifting from a centrally planned economy to a mixed economy.
PTS: 7 DIF: L4 REF: A.37
OBJ: 2.3.3 Analyze the use of central planning in the Soviet Union and China.
STA: A.3 TOP: Economic Systems | Communist Economies
68. ANS:
A list that goes from most to least centrally planned is North Korea, China, South Africa, United States, and Singapore. Two types of government intervention are government ownership of the factors of production and laws that protect the rights of private property owners. North Korea’s government, for example, owns all property and all economic output. The United States has laws that protect private property.
PTS: 7 DIF: L4 REF: A.41
OBJ: 2.4.3 Compare the mixed economies of various nations along a continuum between centrally planned and free market systems. STA: F.3
TOP: Economic Systems | Mixed Economies
69. ANS:
China’s economy is undergoing a period of change as it moves from central planning toward a market-based system.
PTS: 5 DIF: L3 REF: A.43
OBJ: 2.4.1 Explain the rise of mixed economic systems.
TOP: Economic Systems | Mixed Economies
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