Command Economy
In a Communist country, who decides what to produce?
The government
What two systems make up a mixed economy?
Market and command economies
Who makes most of the decisions in a market economy?
Individuals and private businesses
What book did Adam Smith write?
The Wealth of Nations
What was Karl Marx’s famous book called?
The Communist Manifesto
What is the main goal of communism?
A classless society with equality of outcome
What is the governments role in a mixed economy?
Regulate businesses and provides public goods
What are the three economic questions all systems must answer?
What to produce? How to produce? For whom to produce?
What type of government did Smith believe worked best with capitalism?
Limited government that protects property and enforces contracts.
What did Marx call the working class?
The proletariat
What is socialism’s main goal?
Reducing inequality while allowing some private ownership
In what ways would you consider the United States a mixed economy?
Private businesses with government regulation
What motivates producers in a market economy?
Profit
What does “laissez-faire” mean?
Hands-off government approach
What was the main conflict in Marx’s theory of class struggle?
Between the bourgeoisie (owners) and the proletariat (workers)
What is the difference between communism and a command economy?
1. Communism = ideology
2. Command Economy = practice
What’s one challenge of a mixed economy?
Finding the right balance between freedom and regulation
What are the four factors of production?
Capital, Entrepreneurship, Land, Labor,
What is the “invisible hand”?
Economic forces that push individuals to act in their own self interest, unintentionally benefit society as a whole
What problem did Marx believe capitalism caused?
Exploitation and inequality
In a command economy, what replaces supply and demand?
Central planning by the government
What role does the government play when markets fail?
It steps in to correct problems or provide services
Explain two benefits the invisible hand has on our society:
Offers consumer choice
Rewards hard work and creativity
Promotes economic growth
Encourages Innovation
According to Smith, what motivates people and benefits society?
Self-interest and competition
How did Marx believe change would occur in society?
Through a worker revolution