Types of Economies

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Types of Economies

2Trade 1 Trade 2

Trade & Types of

Economies

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40 40 40 40 40

50 50 50 50 50

Question 1 - 10

• What are some limitations of Capitalism?

Answer 1 – 10

• Uneven distribution of resources, consumer difficulty in obtaining information, and health-risk products

Question 1 - 20

• Who makes the decisions in a free enterprise economy?

Answer 1 – 20

• People

Question 1 - 30

• What are the basic questions all economic systems try to answer?

Answer 1 – 30

• What to produce, how to produce, and for whom to produce.

Question 1 - 40

• What gives businesses and individuals reason to work harder?

Answer 1 – 40

• Profit

Question 1 - 50

• When does competition occur?

Answer 1 – 50

• When 2 or more businesses/people sell the same/similiar good.

Question 2 - 10

• Which economic system has total government restrictions?

Answer 2 – 10

• Communism

Question 2 - 20

• T/F – You cannot own property in a free enterprise economy.

Answer 2 – 20

• False

Question 2 - 30

• What are some characteristics of Communism?

Answer 2 – 30

• government ownership, no competition, and no profit

Question 2 - 40

• Which economic system allows for freedom of production?

Answer 2 – 40

• Capitalism.

Question 2 - 50

• How does the Invisible Hand regulate the marketplace?

Answer 2 – 50

• Profit and competition.

Question 3 - 10

• If people didn’t trade, what kinds of things would we go without?

Answer 3 – 10

• Anything you don’t produce yourself.

Question 3 - 20

• What is the world’s largest free trade zone?

Answer 3 – 20

• NAFTA

Question 3 - 30

• Decisions on what to trade are based on the availability of what?

Answer 3 – 30

• The factors of production.

Question 3 - 40

• Why do nations trade?

Answer 3 – 40

• Boosts economic growth, expands markets, and more efficient production.

Question 3 - 50

• What are currency rates affected by?

Answer 3 – 50

• Political and economic conditions• Central bank intervention• Speculation over future dollar value.

Question 4 - 10

• A tax on imports is called what?

Answer 4 – 10

• Tariff

Question 4 - 20

• When the value of imports is greater than the value of exports, what do you have?

Answer 4 – 20

• Trade Deficit

Question 4 - 30

• When the value of exports is greater than the value of imports, what do you have?

Answer 4 – 30

• Trade Surplus

Question 4 - 40

• Why do countries impose trade restrictions?

Answer 4 – 40

• Protect domestic producers.

Question 4 - 50

• Name 5 Barriers to Trade

Answer 4 – 50

• Language• Infrastructure• Values and Religious Attitudes• Political Climate• Legal Climate• International Regulations

Question 5 - 10

• What is an absolute advantage?

Answer 5 – 10

• Production at the lowest cost.

Question 5 - 20

• What is a comparative advantage?

Answer 5 – 20

• Production at the lowest opportunity cost.

Question 5 - 30

• What effect do you think a tariff has on imports? (Price and quantity)

Answer 5 – 30

• Price goes up, quantity supplied goes down.

Question 5 - 40

• When the amount of exports is equal to the amount of imports, what do we have?

Answer 5 – 40

• Balance of trade

Question 5 - 50

• Is the United States a true Capitalist society? Why/why not?

Answer 5 – 50

• We are a mixed economy because there are some government restrictions.