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A mixed economy is
a market-based, economic system based on free enterprise with some government involvement.
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All of the following are key economic questions that every society must answer.
Where should goods and services be produced?
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The method used by a society to produce and distribute goods and services is
an economic system.
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In a centrally planned economy, the three key economic questions are answered by the
central government alone.
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The income people receive for supplying factors of production, such as land, labor, or capital, are
factor payments.
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How a society answers the key economic questions primarily depends on
a society's goals and values.
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What has been mostly responsible for advancing from the agricultural age to the industrial age?
innovation
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In which economy do communities generally have a low standard of living?
traditional economy
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Government programs that protect people experiencing unfavorable economic conditions are
a safety net.
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A centrally planned economy is
an economic system in which the government makes all the decisions about production and consumption of goods and services.
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Why do markets exist?
because people are not self-sufficient and need goods and services produced by others
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The invisible hand is
a term economists use to describe the self-regulating nature of the marketplace.
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A household is a person or a group of people who live in the same residence. In economics, households are also
consumers of goods and services.
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What is the purpose of a firm?
to produce goods and services
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Which of the following is an example of competition in the marketplace?
: A small town has only two grocery stores, which are located one block away from each other.
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Something, such as a reward or bonus, that encourages people to behave in a certain way could be called
an incentive.
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Consumer sovereignty is
the power of consumers to decide what gets produced.
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The struggle among producers for consumer dollars is
competition.
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According to Adam Smith, what are the two factors that regulate a marketplace?
competition and self-interest
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In the study of economics, the definition of a market is
an arrangement that allows buyers and sellers to exchange things.
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What is one benefit of a centrally planned economy?
it provides a jumpstart to some industries
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What is a major disadvantage of a centrally planned economy?
It cannot meet consumers' needs and wants.
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Industry that requires a large capital investment and that produces items used in other industries is known as
heavy industry.
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Authoritarian means
requiring strict obedience to an authority, such as a dictator.
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Who answers the key economic questions in a centrally planned economy?
government
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in the Soviet Union, a collective was a
large farm leased from the state to groups of peasant farmers.
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Communism is a(n)
political system characterized by a centrally planned economy with all economic and political power resting in the hands of the central government.
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Which of the following was NOT a priority of Soviet planners?
providing a variety of luxury items for all consumers
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A social and political philosophy based on the belief that democratic means should be used to evenly distribute wealth throughout a society is
socialism.
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Which of the following countries is in transition from a centrally planned economy to a market-based system?
China
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With "centrally planned" on the left and "free market" on the right, which of the following countries' economic systems would be farthest to the right on the Continuum of Mixed Economies?
Hong Kong
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Property owned by individuals or companies, not by the government or the people, as a whole is
private property.
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A Continuum is a
range with no clear divisions.
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Which of the following goods is provided by the U.S. government rather than by individuals?
roads
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Why do governments fulfill some of society's needs, such as education, health care, and mass transit?
so that all members of the society can participate
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Which of the following is NOT a main priority of the U.S. government?
subsidizing businesses to keep product prices low
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An economic system characterized by private or corporate ownership of capital goods; investments that are determined by private decision rather than by state control; and determined in a free market is
free enterprise.
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Laissez faire is
the doctrine that states that government generally should not intervene in the marketplace.
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To sell state-run firms to individuals is to
privatize.
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Socialists believe economic equality is only possible if
the public controls the economy.
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In a traditional economy, economic decisions are based largely on
custom.
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Which statement applies to all centrally-planned economies?
The government makes all important economic decisions.
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The government decides which goods and services will be produced in a
command economy.
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The circular flow model shows
the interactions between households and businesses in the free market.
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Which of the following countries is the most extreme example of a centrally-planned economy?
North Korea
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The doctrine that government should not intervene in the marketplace is called
laissez faire.
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The self-regulating nature of the marketplace is called
the invisible hand.
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The former Soviet Union was an example of a communist country where
most economic and political power was controlled by the government.
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A social and political philosophy based on the belief that democratic means should be used to distribute wealth evenly throughout society is called
socialism.
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Competition and self-interest are two important forces in
free market economies.
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The free enterprise system of the United States is best described as a
mixed economy with limited government intervention and a great deal of economic freedom.
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Which is a key economic question faced by all countries?
What goods and services should be produced?
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The circular flow model of a mixed economy shows
how government interacts with households and firms in the product and factor markets.
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In return for supplying the factors of production—land, labor, or capital—people receive
factor payments.
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Which economic goals are difficult to achieve in a pure market system?
equity and security
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In an economy in transition from central planning to free enterprise, you might expect to see
state firms sold to private individuals or entities.
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Markets allow us to
exchange things we have for things we want or need.
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The free market economist Adam Smith is NOT known for
the circular flow model of a mixed economy.
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How does specialization affect an economy?
It prevents duplication of effort.
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