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Chapter 2 Economics Test
GRADED A+ (ACTUAL TEST ) Questions and Answers (Solved)
• Organized way a society provides for the wants and needs of its people.-
Answer: Economic system
• Economic system in which the allocation of scarce resources, and other economic activity, is the result of ritual, habit, or custom.
Answer: Traditional Economy
• There is little uncertainty. Everyone knows their role
Answer: Traditional Economy advantage
• Very little innovation/ economic stagnation.
Answer: Traditional Economy disadvantage
• Economic system characterized by a central authority that makes MOST of the major economic decisions.
Answer: Command economy
• Government can change directions quickly & people can afford some things that they may not otherwise be able to afford
Answer: Command economy advantage
• Leaders provide for themselves at the expense of the general population.-
Answer: Command economy disadvantage 1 1 / 2
• Loss of Individual Freedom.
Answer: Command economy disadvantage 2
• Production of low-quality goods:
Answer: Command economy disadvantage 3
• large decision-making bureaucracy
Answer: Command economy disadvantage 4
• Rewards for individual initiative are rare: In former Soviet
Union, doctors were paid the same as factory workers, so there was no incentive to go through the extensive education.
Answer: Command economy disadvantage 5
• lacks the flexibility to deal with problems.
Answer: Command economy disadvantage 6
• Economies remain small because there are too many decisions to handle efficiently.
Answer: Command economy disadvantage 7
• Economic system in which government owns SOME factors of produc tion and has a role in determining what and how goods are produced.
Answer: Socialism
• Economic and political system in which factors of production are collectively owned and directed by the state; a theoretically classless society in which everyone works for the common
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