A Major Distinguishing Feature Between Capitalist and Socialist (Or Command)

question 9

Multiple Choice

A major distinguishing feature between capitalist and socialist (or command) economies is that

• A) under capitalism the average citizen is always wealthier than in socialist economies
• B) decision making is typically decentralized in socialist economies and is centralized in capitalist economies
• C) socialist countries all have red flags and capitalistic economies do not
• D) resources are publically owned in capitalist economies
• E) decision making is typically decentralized under capitalism while it is centralized in command economies

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Definitions:

Resource Problem

The economic issue of having limited resources to satisfy unlimited wants and needs, necessitating choices and priorities in allocation.

Positive Externalities

Benefits experienced by third parties who are not directly involved in the production or consumption of a good or service.

Moral Hazard Problem

A situation where one party engages in risky behavior knowing that it is protected against the consequences by another party.

Government's Role

Refers to the duties and functions that a government carries out to ensure the stability and growth of its nation, including legislation, public service provision, and economic management.