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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” doesn’t do you much good in the long run. “Learning the information”, on the other hand, will. !!

Vocabulary to know and love !

!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? !

Section 1 Section 2 Section 3 Section 4

Economic System Socialism Private Property Rights Mixed Economy

Traditional Economy Communism Capitalism Global Economy

Command Economy Competition Nationalize

Market Economy Consumer Sovereignty Privatize

Voluntary Exchange

Laissez Faire

Mr. Johnson

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

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 benefit 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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