Economics-Mr. Doebbler-Chapter 2 Reading Questions
DIRECTIONS: Complete all of the following questions.
1. A ___________________ uses resources and economic activity from ritual, habit, or custom.
2. Habit and custom __________________ most social behavior.
3. Individuals ________________________ to make decisions in traditional economies, elders and ancestors do.
4. Some examples of traditional economies are? List several countries or groups.
5. The main advantage of a traditional economy is that _____________________ which role to play.
6. In a traditional economy ________________________ exists ever WHAT to produce, HOW TO produce,
and FOR WHOM to produce.
7. The main drawback of a traditional economy is that it tends to discourage ________________________ of
doing things.
8. In a command economy, a ________________________ makes the decisions about WHAT, HOW, and FOR
WHOM to produce.
9. A modern and somewhat more liberal, version of the command economy is _______________________.
10. Socialism is an economic and political system in which the government ________________ but not all, of
the factors of production.
11. As such, in ________________________, the government plays a major role in answering most of the major
WHAT, HOW, and FOR WHOM questions.
12. In a pure command economy, the central governing authority _____________________ of the major
economic decisions.
13. Most command economies severely limit ________________________ property rights.
14. Under socialism, the stated objective of the government is to __________________ the needs of its people,
not enhance the welfare of its leaders.
15. List an example of a pure command economy.
16. Why are countries like Denmark, Sweden, and Norway not described as socialist?
17. A major strength of a command economy is that it ______________________ direction drastically.
18. Another advantage of a socialist command economy is that it _______________________ to receive some
goods and serves that they would otherwise not be able to afford.
19. One of the disadvantages of a command economy, is that leaders ____________________ at the expense of
the general population.
20. A second disadvantage of a command/socialist economy is the __________________ the individual freedom
to choose
21. A third disadvantage of a command economy is the production of ____________________
goods.
22. A fourth disadvantage in a command economy is that it requires a larger _______________ bureaucracy.
23. A fifth disadvantage in a command economy is that _______________________ initiatives are rare.
24. Economies with relatively uniform wages for different occupations and effort do not provide much
_____________________ for people to learn or work.
25. A sixth disadvantage in a command economy is that a planning bureaucracy often lacks the
______________________ to promptly deal with major problems, or even day-to-day ones.
26. Pure command economies tend to stay ____________________ because they have a hard time making all of
the decisions necessary for growth and change to take place.
27. Goods and services are __________________, even if the country has an economy directed by socialism.
28. A _______________________ is an arrange where buyers and sellers interact to determine the prices of
goods and services.
29. A _________________________ can exist as long as a mechanism is in place for buyers and sellers to
interact.
30. A market economy is characterized by a great deal of ______________________.
31. Market economies also feature the ________________________ of resources.
32. A market economy is often described as being based on ______________________ an economic system
where private citizens own and use the factors of production for their own profit or gain.
33. The term capitalism draws attention to ___________________ of resources.
34. The term ______________________ focuses on where the goods and services are exchanged.
35. Goods that are privately owned _____________________ than goods owned by others.
36. List the six (6) advantages of a market economy. 1._________________________ 2.
______________________3. ________________________ 4.___________________
5.__________________________6.________________________
37. A market economy ________________________ provide for everyone.
38. A market economy also may not provide enough of some ________________ and services.
39. A Market economy has a high degree of _______________________.
40. List the three (3) reasons why mixed economies exist. 1.___________________________
_____________________________________________________________________
2._________________________________________ 3.________________________
___________________________________________
41. The worst period of economic decline in the United States history was the ____________________________
that lasted from approximately 1929-1939.
42. Often the distinguishing characteristics of a socialist economy is it has _________________ rule.
43. Perhaps the most distinguishing characteristics of a market or capitalist economy is the
__________________________ of productive resources and the freedom to use them as the owner sees fit.
44. Under socialism, private individuals own ______________________ of the productive resources while the
government owns and uses the rest.
45. Another shared characteristic under socialism is that the more socialistic the country the more likely the
political system is to be ______________________.
46. Mixed economies _______________________ characteristics with all three economic systems (Traditional,
Command, and Market).
47. The communist philosophy was first laid out by the economic historian(s) and social scientist(s)
_______________________ and __________________________in the 1800’s.
48. Karl Marx viewed all of history as a ___________________________ between workers and property owners.
49. After overthrowing property owners, Marx believed society would reach a theoretically ideal called
________________________.
50. In communism, _________________________ would be needed and therefore could be eliminated.
51. In order to get to communism, Marx thought that a society would _____________________ a period of
socialism that required a strong government.
52. In communism, labor is organized for the common advantage of the ___________________ and everyone
consumes according to his or her needs.
53. In practice, communist governments have become so involved in dictating the everyday economic decisions
of WHAT, WHERE, and FOR WHOM that they frequently are called ________________________
economies.
54. There are many examples of mixed market economies, especially in democratic countries where people have
the _____________________ to influence the makeup of the economy.
55. Sweden was once known as the “ ______________________” because of its combination of a strong private
economy the broadest range of social programs in the free world.
56. Countries that have mixed economies seem to have them because of the _______________ the mixed
economies offer.
57. Mixed economies have to cover costs of social programs through ___________________.
58. The dominant economic trend of our lifetime has been the _______________________ of communist and
socialist economic systems to capitalism.
59. When an economy becomes large and complex, a capitalist _____________________ system is the most
efficient way to organize production and provide the necessary economic incentives.
60. The _____________________________ indicates that communism as economic system has reached an
evolutionary dead end.
61. Pure capitalism can be harsh but in democratic nations, people can ___________________ to meet more their
economic and social goals.
62. A key feature of capitalism is the ownership of ________________________.
63. Privatization or the ______________________ of state-owned factories and other property to private
ownership, must be accomplished.
64. Privatization is important because entrepreneurs wanted to be rewarded for _____________ business ventures
involving risks.
65. When countries transitioned to capitalism, the (communist) party feared that it ___________ much of the
political power as a new class of entrepreneurs and capitalists took over.
66. Former political leaders of the Soviet Union traded their political power for ______________
______________ in the form of resource ownership, so the old ruling group became the new ruling group.
67. List the four (4) incentives that people must adjust to transitioning to capitalism:
1.________________________________ 2.________________________________ 3.
_______________________________ 4.________________________________
68. Too many countries that want the advantages of capitalism _________________, but do not consider the
costs
69. The first _______________________ a comprehensive centralized economic plan designed to achieve rapid
industrialization.
70. _______________________ was the central authority (in the Soviet Union) that devised the plans and
directed overall economic policy.
71. Central planning also extended to agriculture with the introduction of __________________ the forced
common ownership of all agricultural and industrial enterprises.
72. In 1985, Mikhail Gorbachev introduced ____________________, the restructuring of the Soviet economy.
73. In 1958, Chinese leaders in instituted the _________________ an attempt to revolutionize industrial and
agricultural production overnight.
74. China’s transition towards capitalism was made possible because of its willingness to replace
_________________________ control with capitalist practices.
75. In the past, Latin American countries followed a path of _________________ that combined socialism and
isolationism.
76. The struggle for freedom begin in ______________________ with Solidarity, the independent (and
sometimes illegal) labor union in 1980.
77. In 2004, Poland joined the European Union the association of European nations created in 1993 to develop a
______________________ with full economic and political cooperation.
78. Hungary was considered the most “Western” Communist bloc country with a thriving
__________________________ a market which entrepreneurs and merchants sell goods illegally.
79. Because of its small and aging population Japan has worked to boost productivity by developing techniques
that are __________________________ methods of production that use large amounts of capital for every
person employed rather than labor-intensive.
80. The feature that really sets Japan apart from the United States is the degree to which Japan’s government
________________________ in the day-to-day activities of the private sector.
81. The role of the keirtetsu is to ensure that _________________________ does not threaten individual Japanese
firms.
82. One of the most successful nations in Asia is ________________________.
83. The South Korean experience shows that ________________________ can change a badly war-damaged
economy into a well-developed, highly industrial one in just a few generations.
84. Despite its size, Singapore’s ________ ranks about 40th in the world, and it has a per capita income almost
20% higher than the United States.
85. Planning has always been a feature of the Taiwanese economy, with the government trying to identify those
______________________ most likely to grow in the future.
86. The welfare system in Sweden attracts other residents of the European Union because of the liberal benefits
they can collect, something that contributes to a high ___________________ rate.