Econ 200 Module 2

What are the 3 economic questions?

What to produce? How to produce? Who benefits?

What are the three capitalism traits?

Private Ownership,

Market Allocation,

Self-Interest Motives

Benefits of Capitalism?

Positive Incentives, Innovation/Invention,

Decentralized Decision Making

Opportunity

Issues of Capitalism?

Inequality,

Competition Erodes,

Pay Rates

Externalities,

Asymmetric Information

Planned Obsolescence

Who concept of the best economy should be led by an Invisible Hand?

Adam Smith

What is Social Darwinism?

People are poor because nature made them poor; survival of the fittest.

What is a Contestable Market?

As long as competition is possible, the market will always work as if there is competition.

What is Laissez-Faire

Government should not interfere.

Another word for progressive is?

Fairness

What economic system relies on government to decide what is best for society?

Socialism/Communism

What economic system is based on the private ownership of the means of production?

Capitalism

What economic system believes there should still be private ownership but government gets to tell them what to do?

Fascism

Low Prices causes a _?

Shortage

High Prices cause a _?

Surplus

Capitalism is called that because the _____ is(are) privately owned.

Capital

TRUE or FALSE

Capitalism and socialism have the same three basic economic questions, just different answers.

True

The question of how to produce is answered in capitalism by ______.

Markets

Capitalism is appreciated by economists because decision making is ______.

Decentralized

Which of the following is not considered one of the potential problems with capitalism?

innovation fades over time

TRUE or FALSE

Marx anticipated globalization and increasing income inequality as natural outcomes of capitalism.

True

TRUE or FALSE

Utopian socialists believed that workers and businesses could be made to cooperate using scientific principles would make everybody better off.

True

TRUE or FALSE

Marx believed that it was necessary to have a violent overthrow of capitalism.

True

TRUE or FALSE

To Marx, all history is a story of class struggle, and capitalism makes workers an appendage of the machine leading to conflict between capitalists and workers.

True

TRUE or FALSE

There are no incentives in a socialist economy.

False