KEY ECONOMIC QUESTIONS



ECONOMIC SYSTEMS

1. All economic systems have to answer these questions. Give an example of how a market system and a command economy would answer each question.

What to produce?

How to produce?

For whom should we produce?

2. How does the market economy answer these questions?

What is produced is decided by the ................ She decides how to spend her ......... and each time money is spent it counts as a vote for that product. This signals to ............ that they need to produce more of that product. This means that resources are transferred to production of that product.

Firms in the market system aim to make .......... Therefore, they aim to produce in the most ............... way possible.

Who gets the products is determined by the size of ........... In a market system a rich person will get ........ goods than a poor person.

3. Fill in this table showing the advantages and disadvantages of a market economy.

|Advantages |Disadvantages |

| | |

| | |

| | |

Fill in this table showing the advantages and disadvantages of a command economy.

|Advantages |Disadvantages |

| | |

| | |

| | |

4. Which economists are associated with each of these economic systems?

5. Why do most countries have a mixed economy?

Because the market sometimes ........, the .................... intervenes to solve some of the economic problems. For example, if it was left to the market education would only be provided if someone can ...... for it. This would mean that ....... people would not benefit from education and the ................ would suffer. Therefore in most countries the .......... provides education for some people for ...... In this case there is a .......... economy with the state involved in the ................ of resources.

6. What types of goods and services does the state provide in mixed economies?

................
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