Markets

• What are the six types of economy mentioned in the study material?

  Mixed, planned, free market, command, capitalist, and market economy
• What does the allocation of resources represent?

  It represents what has been produced and how
• How do markets coordinate the allocation of resources?

  Markets bring together buyers and sellers to agree on prices
• What characterizes many economies as mixed economies?

  They use both markets and planning to allocate resources
• What aspects should be considered when evaluating economic systems?

  Choice, innovation, efficiency, economic growth, and income distribution
• What is the basic economic problem that economies aim to resolve?

  • Resources are scarce
  • Wants are infinite
  • Allocation of resources is necessary
• What are the three dimensions of resource allocation?

  1. What is to be produced?
  2. How is it to be produced?
  3. For whom is it to be produced?
• What does the question "What is to be produced?" refer to in resource allocation?

  It refers to the types of goods and services to be produced
• What does the question "How is it to be produced?" address?

  It addresses the methods and technology used in production
• What does the question "For whom is it to be produced?" consider?

  It considers the distribution of products among the population
• How is an economic system defined?

  An economic system is a complex network of individuals, organizations, and institutions that allocates resources
• Who are the various actors within an economic system?

  Individuals, groups, and government
• What role do individuals play in an economic system?

  They are consumers and workers who may own factors of production
• What types of groups exist within an economic system?

  Firms, trade unions, political parties, families, and charities
• What is one key role of government in an economic system?

  To exercise power and influence resource allocation through laws
• What are the two main ways resources have been allocated in rich industrialized economies over the past 100 years?

  1. Market mechanism
  2. Planning
• How does the market mechanism allocate resources?

  It brings together buyers and sellers to agree on a price
• How does planning allocate resources?

  Through administrative decisions made by individuals or organizations
• What is an example of planning in resource allocation within families?

  Deciding who in the family gets what for Christmas presents
• What is an example of planning in resource allocation at a national level?

  Governments allocate resources through budgets and spending plans
• What is the significance of Black Friday in the context of market economies?

  • It illustrates consumer behavior and demand
  • It shows interaction between consumers, firms, and government
  • It highlights the impact of discounts on market dynamics
• How did the planned economies of the Soviet Union and Eastern Europe perform in terms of growth?

  They fell behind in terms of growth due to large inefficiencies
• What is the relationship between mixed and free market economies at similar levels of development?

  They seem to grow at very similar rates
• What did Karl Marx believe about the proletariat and property owners?

  He believed the proletariat would rise against property owners
• What was Joseph Stalin's approach to transitioning to a utopian economy?

  He created a command economy where the state owned most resources
• How do command economies compare to free market and mixed economies in delivering economic benefits?

  Command economies have not been as successful in delivering benefits
• What are the key terms related to types of economies mentioned in the study material?

  • Command economy: government allocates resources
  • Economic system: network of individuals and organizations
  • Free market economy: resolves problems through market mechanism
  • Mixed economy: uses both market and government planning
• How did the UK economy evolve between 1945 and 1951?

  • Formation of the Welfare State
  • Introduction of a free National Health Service
  • Implementation of cradle-to-grave benefits
• What was the impact of the Thatcher revolution on the UK economy?

  It aimed to reduce the role of the state and shift towards a market-oriented economy
• What challenges did Sweden face in the early 1990s?

  It experienced a banking crisis and a major recession
• How did government spending in Sweden change by 2014?

  It fell to a little over 50 percent of GDP
• What happened to government spending as a proportion of GDP during the 2008 recession in the UK?

  It rose to 51 percent in 2009
• What was the goal of the coalition government in 2010 regarding public spending?

  To cut public spending and reduce government borrowing
• What ongoing debate is mentioned regarding the UK economy?

  Whether the UK should be a mixed economy or a free market economy