Culture, Economic and Government
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Economics and Personal Finance Study Guide Answer Key
1. In a Traditional Economy:
a. Who determines how goods and services will be produced? People determine how goods will be produced by how it has been done in the past.
b. Who determines what goods and services will be produced? People determine by what has been passed down from generation to generation.
c. Who will consume the goods and services? the people who live in the areas
2. In a Command Economy:
a. Who determines how goods and services will be produced? Government planning committees
b. Who determines what goods and services will be produced? Government planning committees
c. Who will consume the goods and services? Consumers (the people)
3. In a Market Economy:
a. Who determines how goods and services will be produced? producers and consumers using the forces of supply and demand
b. Who determines what goods and services will be produced? producers and consumers using the forces of supply and demand
c. Who will consume the goods and services? Consumers (the people)
4. What is a Mixed Economy? An economy that is part command economy and part market economy
5. How is a command economy different than a market economy? In a command Economy the government makes all of the economic decisions but in a market economy the producers and consumers make the decisions.
6. Who makes the economic decisions in a market economy? Producers and consumers
7. Who controls what is being produced in a command economy? Government planning committees
8. How do economists measure a country’s economy? By looking at a country’s GDP
9. Which type of economy is also known as capitalism? Market economy
10. What are 3 examples of trade barriers? Tariff, quota, and embargo
11. How would one country placing a quota on imports affect trade? It would limit the amount of goods imported into a country
12. What is a trade embargo? A government order stopping trade with another country
13. What is an entrepreneur? A person that owns a business
14. What is the GDP of a country? The total value of goods and services produced in a country in a year
15. How can a country raise its GDP? By investing in human capital (better education, skills, and health of workers) and physical capital (updating factories, technology and buildings)
16. Which type of trade barrier involves a limit on goods brought into a country? quota
17. What is an example of an investment in human capital? better education, skills, and health of workers
18. Why do people have to exchange currency? Because different countries have different currencies
19. What is spending more than you make called? debt
20. Why is investing money sometimes risky? You can lose your money and have less than you started with
21. What are 3 reasons people sometimes need to borrow money? (see PPT for examples) car loans, house mortgages, school loans, or business loans
22. What is credit worthiness? Having good credit where someone would want to trust you and loan you money
23. What is a benefit of putting money into savings account verses just saving it at home? Savings accounts earn interest so your money grows
24. How does planning a budget help you to spend and save your income wisely? You can track where your money goes and make adjustments to your spending
25. How could a person build a good credit history? Being employed for a long time at one job, getting a good education, and paying your bills on time
***** Know ALL Economic and Personal Finance Vocabulary!!
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