Chapter 1 and 2 Test (Study Guide)



Study Guide – Chapter 1 and 2

Economics –

Microeconomics –

Macroeconomics –

Scarcity –

Factors of Production (what are they and be able to give and identify examples)

1)

2)

3)

4)

Adam Smith –

Trade-Offs –

Opportunity Cost –

Production Possibilities Curve –

Economic System –

The 3 Economic Questions –

Traditional Economy –

Command Economy –

Market Economy –

Mixed Economy –

Circular Flow of Income and Output

Six Characteristics of the American Economy

• Limited Role of Gov’t –

• Freedom of Enterprise –

• Freedom of Choice –

• Profit Incentive –

• Competition –

• Private Property -

Laissez-Faire –

Karl Marx –

Socialism –

Communism –

Capitalism –

ESSAY / SHORT ANSWER

• Be ready to discuss capitalism (market economies) and socialism (command economies). In doing so you should be able to explain what they are and explain the pros and cons of each system. You should also be able to talk about the USA economic system and be able to explain why it is a mixed economy.

• You should be able to define economics and explain how it relates to scarcity and opportunity cost and the factors of production.

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