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Economics: Unit 2 Study Packet: Economic Systems

Use Chapter 2 in your textbook to define the vocabulary terms and help you with the answers to the questions. A bit of advice: Finding the answers doesnt do you much good in the long run. Learning the information, on the other hand, will.

Vocabulary to know and love

Section 1
Economic System Traditional Economy Command Economy Market Economy

Section 2
Socialism Communism

Section 3
Private Property Rights Capitalism Competition Consumer Sovereignty Voluntary Exchange Laissez Faire

Section 4
Mixed Economy Global Economy Nationalize Privatize

Review questions to know and love Section 1: Types of Economic Systems

1. What are the 3 basic questions ANY economic system seeks to answer? 1. 2. 3. 2. How does a traditional economy answer the 3 basic questions?

3. How does a command economy answer the 3 basic questions?

4. How does a market economy answer the 3 basic questions?

Mr. Johnson


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5. Who controls the resources in each type of economy? 1. Traditional: 2. Command: 3. Market:

6. What is the role of government in each type of economy? 1. Traditional: 2. Command: 3. Market:

Section 2: Command Economic Systems

1. Who was Karl Marx and what problem was he trying to solve with the Communist Manifesto?

2. Why has extreme government control of the economy been used in attempts to create a Communist society in places like Russia, China, and North Korea?

3. Why do so-called Communist countries use authoritarian methods to maintain their economic and political systems? [Authoritarian = dictatorship; the government has all authority]

4. Compare the successes and failures of Communism in North Korea and China

Mr. Johnson


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Section 3: Market Economic Systems

1. What are the 6 Traits of market economic systems? 1. ________________. What does it mean? ____________________________________

2. ________________. What does it mean? ____________________________________

3. ________________. What does it mean? ____________________________________

4. ________________. What does it mean? ____________________________________

5. ________________. What does it mean? ____________________________________

6. ________________. What does it mean? ____________________________________ 2. Draw and label the Circular Flow for market economic systems.

3. In what ways does self-interest serve the nature of a market economy?

4. What are the advantages of a market economy?

5. What disadvantages of a market economy call for government involvement?

Mr. Johnson


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Section 4: Modern Economies in the Global Age

1. Explain what it means to Nationalize an industry or business.

2. Explain what it means to Privatize an industry or business.

3. In your opinion, are there some goods and services that should be publicly owned? Why or why not? [Be sure to give SPECIFIC examples]

4. How does the global economy impact your life directly?

5. How do global alliances benet the US economy?

6. Based on Figure 2.6 on page 62, what can you infer about the areas of the world where these products are manufactured?

Mr. Johnson


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