Flashcards on Government and the Economy

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What is the role of government in a market economy?

The role of government in a market economy is to establish and enforce laws, regulate businesses, protect consumers, and provide public goods and services.

What is the difference between a command economy and a market economy?

In a command economy, the government has control over the production and distribution of goods and services, while in a market economy, decisions are primarily made by individuals and businesses.

What are the advantages of a mixed economy?

Advantages of a mixed economy include a balance between government intervention and individual freedom, greater equality in wealth distribution, and the ability to adjust to changing circumstances.

What are the disadvantages of a command economy?

Disadvantages of a command economy include lack of individual freedom, inefficient allocation of resources, and susceptibility to corruption and nepotism.

What are the economic functions of government?

The economic functions of government include stabilization of the economy, redistribution of wealth, regulation of markets, provision of public goods and services, and promotion of economic growth.

Explain the concept of supply and demand in relation to the economy.

Supply and demand is a fundamental economic concept that describes the relationship between the quantity of a product supplied by producers and the quantity demanded by consumers. It influences pricing and allocation of resources in the market.

What is fiscal policy?

Fiscal policy refers to the government's use of taxation and spending to influence the economy. It is often used to stabilize the economy, promote growth, and manage inflation.

What is monetary policy?

Monetary policy refers to the actions taken by the central bank of a country to control the money supply and interest rates in order to achieve economic goals such as price stability, full employment, and economic growth.

What is inflation and how does it affect the economy?

Inflation is the sustained increase in the general level of prices over time. It affects the economy by eroding purchasing power, distorting price signals, and reducing real economic growth.

What is unemployment and how does it impact the economy?

Unemployment refers to the situation where individuals who are willing and able to work are unable to find employment. It impacts the economy by reducing consumer spending, lowering tax revenue, and hindering economic growth.

What is the role of taxation in government finance?

Taxation is a primary source of revenue for governments. It is used to fund public goods and services, redistribute wealth, influence behavior, and stabilize the economy.

What are the different types of taxes levied by governments?

Governments levy various types of taxes such as income tax, sales tax, property tax, corporate tax, and excise tax. Each type of tax serves a different purpose and is collected in different ways.

What is the national debt and how does it impact the economy?

The national debt represents the accumulated borrowing by a government to fund its expenditures. It impacts the economy by increasing interest rates, crowding out private investment, and reducing future economic growth potential.

What is economic inequality and why is it a concern?

Economic inequality refers to the unequal distribution of wealth and income within a society. It is a concern because it can lead to social and political instability, hinder economic mobility, and result in negative societal outcomes.

What is economic globalization and how does it affect countries?

Economic globalization refers to the increasing interdependence and integration of economies across the world. It affects countries by facilitating international trade, increasing economic opportunities, and promoting cultural exchange.

What is the role of government in a market economy?

The role of government in a market economy is to establish and enforce laws, regulate businesses, protect consumers, and provide public goods and services.

What is the difference between a command economy and a market economy?

In a command economy, the government has control over the production and distribution of goods and services, while in a market economy, decisions are primarily made by individuals and businesses.

What are the advantages of a mixed economy?

Advantages of a mixed economy include a balance between government intervention and individual freedom, greater equality in wealth distribution, and the ability to adjust to changing circumstances.

What are the disadvantages of a command economy?

Disadvantages of a command economy include lack of individual freedom, inefficient allocation of resources, and susceptibility to corruption and nepotism.

What are the economic functions of government?

The economic functions of government include stabilization of the economy, redistribution of wealth, regulation of markets, provision of public goods and services, and promotion of economic growth.

Explain the concept of supply and demand in relation to the economy.

Supply and demand is a fundamental economic concept that describes the relationship between the quantity of a product supplied by producers and the quantity demanded by consumers. It influences pricing and allocation of resources in the market.

What is fiscal policy?

Fiscal policy refers to the government's use of taxation and spending to influence the economy. It is often used to stabilize the economy, promote growth, and manage inflation.

What is monetary policy?

Monetary policy refers to the actions taken by the central bank of a country to control the money supply and interest rates in order to achieve economic goals such as price stability, full employment, and economic growth.

What is inflation and how does it affect the economy?

Inflation is the sustained increase in the general level of prices over time. It affects the economy by eroding purchasing power, distorting price signals, and reducing real economic growth.

What is unemployment and how does it impact the economy?

Unemployment refers to the situation where individuals who are willing and able to work are unable to find employment. It impacts the economy by reducing consumer spending, lowering tax revenue, and hindering economic growth.

What is the role of taxation in government finance?

Taxation is a primary source of revenue for governments. It is used to fund public goods and services, redistribute wealth, influence behavior, and stabilize the economy.

What are the different types of taxes levied by governments?

Governments levy various types of taxes such as income tax, sales tax, property tax, corporate tax, and excise tax. Each type of tax serves a different purpose and is collected in different ways.

What is the national debt and how does it impact the economy?

The national debt represents the accumulated borrowing by a government to fund its expenditures. It impacts the economy by increasing interest rates, crowding out private investment, and reducing future economic growth potential.

What is economic inequality and why is it a concern?

Economic inequality refers to the unequal distribution of wealth and income within a society. It is a concern because it can lead to social and political instability, hinder economic mobility, and result in negative societal outcomes.

What is economic globalization and how does it affect countries?

Economic globalization refers to the increasing interdependence and integration of economies across the world. It affects countries by facilitating international trade, increasing economic opportunities, and promoting cultural exchange.

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