Economic Systems

Officials of the government control all aspects of economic activity

Manufacturers of industrial goods control the resources

Wholesalers of agricultural goods make most of the decisions

Supply and demand are determined by consumers

Prices change according to changes in the resources and demand for products

The government sets the prices of products and the quantity of goods

Prices are fixed by agreements among business leaders and labor unions

All industries except smaller businesses are controlled by the government

True

False

True

False

True

False

a pure command system

a traditional system

a pure capitalist system

a mixed system

Market

Command

Mixed system

Traditional

society makes every economic decision

owners can sell their resources to the highest bidder.

individual choices are reflected in collective decisions and decisions are made by central planners.

public ownership of resources is combined with free markets to direct economic activity

the average citizen is wealthy in capitalist economies, whereas the average citizen is poor in socialist economies.

decision making is decentralized in socialist economies, while decision making is centralized in capitalist economies.

resources are publicly owned in capitalist economies, whereas resources are privately owned in command economies.

decision making is decentralized under capitalism, while decision making is centralized in command economies.

tended to promote general welfare.

would decrease the wealth of a nation, which was its ability to produce goods and services.

caused aggregate demand to be greater than aggregate supply.

required the governments invisible hand to keep an economy running smoothly.