Question

chapter 2 mastery test a
part a circle the letter that correctly completes each sentence.

1. what kind of economy is a blend of economic systems? a mixed b market c traditional d command
2. according to adam smith, what will the best economic system have? a competition b democracy c government help d incentives
3. what are the three basic economic questions? a who, what, and when b what, how, and who c how, where, and what d when, where, and how
4. what is another name for a command economy? a capitalism b planned c socialism d traditional
5. which economic system is the only pure system that really exists? a command b market c traditional d mixed

part b write the correct word from the word bank to complete each sentence.
word bank: incentive, economic system, government, communist, invisible hand, socialist, democratic socialism, democracy, rural, market economy

1. adam smith believed that competition acts like a(n) ______________.
2. in a(n) ______________ economy, the government owns all property, factories, and land.
3. a(n) ______________ is something that makes a person take an action.
4. ______________ describes a type of government where people have a say but the government owns the major industries.
5. in a(n) ______________, citizens take part in the government.
6. a(n) ______________ helps a society provide for the wants and needs of its people.
7. traditional economies are often found in ______________ areas.
8. ______________ is another name for capitalism.
9. in the united states, both ______________ and individuals share in making economic decisions.
10. in a(n) ______________ economy, the government owns the utilities, transportation systems, and other major industries.

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Explanation:

1. A mixed economy combines elements of market and command economies.
2. Adam Smith emphasized competition in a good economic system.
3. The three basic economic questions are what, how, and for whom to produce.
4. A command economy is also called a planned economy.
5. No pure - single economic system exists in reality, but market economy is often considered more 'pure' among common ones.
6. Adam Smith's concept of the 'invisible hand' is related to competition.
7. In a communist economy, the government owns all property, factories, and land.
8. An incentive motivates a person to act.
9. Democratic socialism is a system where people have a say and the government owns major industries.
10. In a democracy, citizens participate in government.
11. An economic system helps meet people's wants and needs.
12. Traditional economies are often in rural areas.
13. Capitalism is related to market - based systems.
14. In the US, both government and individuals make economic decisions.
15. In a socialist economy, the government owns key industries.

Answer:

1. A. mixed
2. A. competition
3. B. what, how, and who
4. B. planned
5. B. market
6. invisible hand
7. communist
8. incentive
9. democratic socialism
10. democracy
11. economic system
12. rural
13. market economy
14. government
15. socialist