Question

1. Who answers the three fundamental economic questions in a:

a. Command economy?

b. Market Economy?

c. Mixed economy?

2. Describe the circular flow of the economy?

3. When dies economic growth occur? Why is productivity important to economic growth?

4. What is the difference between capitalism and communism with private property?

5. Hiw does the profit motive and competition work together to benefit consumers?

Answer 1

1) :-3 basic economic questions must a nation answer that defines their economy are

1) What goods and services should be produced?

2) How should the goods and services be produced?

3) For whom should the goods and services be produced Command Economy

a) Command economy are those economy under which system depends on the government to determine what goods and services to produce and how to produce them.

the command economy answer the three basic economic questions

Under command economy all three question are given by The government, who answers all of the questions.

b) market economy

Market economy is economic system in which demand, supply, and the price system help people make desicions it is free enterprise economy.

Under this economy people answer the all three basic question.

c) Mixed economy

Mixed economy is Combination of a market and a command economy.

•Under this economy Government takes care of people's needs

•Understand this economy Marketplace takes care of people's wants.

Under mixed economy all three basic answer are taken by people both people and government. They both participate in decision making.

2) :-Circular Flow of Economics

A nation's overall levels of income, employment and prices are determined by the interaction of spending and production decisions made by all households, firms, gov't agencies and others in the economy.

The circular flow model illustrates that

•the way in which resources, goods and services, and money flow among individuals, businesses, and governments in a market economy.

•One person's spending is other people's income. When consumers make purchases, goods and services are transferred from businesses to household in exchange for money payments. That money is used in turn by businesses to pay for natural resources, human resources and capital goods and to pay taxes.