Download Study Guide (Use your notes and chapter 2 in the book) This is a

Study Guide (Use your notes and chapter 2 in the book) This is a requirement… must be turned in after test
Vocabulary
- Incentive
- Economic efficiency
- Standard of living
- Profit
- Economic system
- Economic equity
- Market
- Private property
- GDP per capita
- Command system
- Traditional system
- Market system
- Laissez faire
- Competition
- tariff
- Mixed economy
- Economic growth
- Invisible hand
- Entrepreneur
Concepts
1. What are the 3 key economic questions?
2. March the following characteristics to the correct economic system (command/traditional/market)
- government owns factors of production
- Strong family ties
- Based on voluntary exchange
discouraged
- Businesses are privately owned - Limited choice among goods and services
- Capitalism
- Individuals have little influence over basic decisions
- Decisions based on customs and beliefs (often religious)
- Changes are made quickly
- Individuals and businesses exchange money, goods, and services
production methods
3.
4.
List characteristics of a mixed-market economy.
What has to happen in a market economy in order for
goods and services to be quality and maintain
relatively low prices?
5. Why are property rights important to market systems?
6. What do entrepreneurs have to do in order to be
successful over time?
7. Explain Adam Smith’s concept of “self-interest”.
8. Who is Adam Smith and what is he frequently referred
to as?
9. Explain the circular flow model and the relationship it
represents.
10. What is the goal of economic stability?
11. Who owns the factors of production in a
command/traditional/market economy?
- Change is
-Inefficient
12. What are the goals of the American economy?
13. What is the role of government in our free enterprise
economy?
14. How do freedom of enterprise and freedom of choice
apply to the American economy?
15. What roles do private property, the profit incentive,
and competition play in the American economy?
16. How does an “invisible hand” directing an individual’s
economic choices benefit society as a whole? (p.45)
17. In Smith’s opinion, why should people not attempt to
“employ their resources” in many industries? (p.45)
18. How can people balance economic rights with
economic responsibilities?
19. How is the wealth of a nation determined?