Quiz #2
Economic Systems
1. An economic system is…
a. how governmental officials are elected into office.
b. a system of production and the exchange of goods and services for the benefit of citizens.
c. the taking over of a weaker country for political and economic gain.
2. Which summarizes (describes) a traditional economic system?
a. central government control, central planning, governmental price control
b. diplomacy, labor participates in managerial decisions
c. private ownership, social control of labor and prices
d. direct trade, no competition, relies on customs and traditions
3. Economic Characteristics:
 Privately owned (individual) businesses and operated for a profit.
 The focus is on individual profit rather than on workers or society as a whole.
Which economic system does the above describe?
a. Command Economy (Communism)
b. Market Economy (Capitalism)
c. Traditional Economy
4. The free market system of capitalism was defended in the book, ‘The Wealth of Nations’, by…
a. Thomas Jefferson
b. Karl Marx
c. Adam Smith
5. “The proletariats (workers) have nothing to lose but their chains… workers of the world unite.”
Who would most agree with this statement?
a. Karl Marx
b. Charles Darwin
c. Adam Smith
6. What is a drawback (negative) of a market economy?
a. Big business owners may exploit (take advantage) their workers in an effort to increase profit.
b. There is a potential (chance) for greed by business owners and the very wealthy think only of
themselves.
c. There is a potential (chance) for the rich to get richer, as the poor get poorer.
d. All of the above.
Mod.
7. What is a drawback (negative) of a command economy?
a. Business owners are required to pay taxes and minimum wage to their workers, which keeps
workers happy and production high.
b. Workers have the right to better working conditions.
c. There is no class system and everyone is considered equal.
d. There is little incentive for hard work and innovation, due to workers being paid the same
amount of money regardless of what their job is and whether they like it or not.
Students work in groups of 3 to complete a project on a world revolution. The students will be producing a power
point presentation for the class. The teacher will be grading the students on their final product, and all students in the
group will get the same grade for the project...no matter how hard each one of them works.
8. If this classroom and the grading system above was an economic system, which would it be?
a. Traditional
b. Market
c. Command
Paradise Island is a beautiful island-country in the Pacific Ocean. Due to a new governmental law passed, citizens of
Paradise Island are paid a minimum of $10/hr. for their work. Citizens of Paradise Island enjoy many freedoms, such
as freedom of speech and religion, along with economic freedoms to invest and invent new technologies for profit.
The only drawback (negative) is that the taxes are high, due to new governmental projects such as new public parks,
schools, and roads.
9. What economic system is being described in Paradise Island above?
a. Traditional
b. Market
c. Command
d. Mixed
“Innovations are normally the creation of business people.”
-
Joseph Schumpter, Economic Theorist, 1911
10. With which economic theory would Joseph Schumpter likely have agreed?
a. Command Economy
b. Traditional Economy
c. Market (capitalism) Economy
Mod.