Some examples from this set of practice questions
1.
What economic questions must every society answer?
Answer: What goods and services should be produced? How should these goods and services be produced? Who consumes these goods and services?
2.
Define an economic system.
Answer: The method used by a society to produce and distribute goods and services
3.
What are the three major types of economic systems?
Answer: Command (centrally-planned), free market, and mixed.
4.
Describe a centrally-planned economic system. (Also known as a command economy or communism)
Answer: An economic system in which the government owns all the resources and answers all three economic questions
5.
Why do centrally-planned economies face problems of poor-quality goods, shortages, and unhappy citizens?
Answer: There is little incentive to work harder and central planners have a hard time predicting preferences
6.
Describe some advantages of centrally-planned economies.
Answer: Low unemployment, good job security, less income inequality, free healthcare
7.
Describe some disadvantages of centrally-planned economies.
Answer: No incentive to work harder, no incentive to innovate, no competition (poor quality of goods), corrupt leaders, few individual freedoms
8.
Describe a free-market economic system. (Also known as capitalism)
Answer: An economic system in which individuals own resources and answer the three economic questions
9.
What is the concept of the invisible hand?
Answer: Society’s goals will be met as individuals seek their own self-interest
10.
Under which economic system does the invisible hand take place?
Answer: Free-market system, also known as capitalism.
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