Section+2.1

1.) What is an **economic system**? An **economic system** is the method used by society to produce and distribute goods and services 2.) How do **traditional economy**, a **market economy**, a **command economy**, and a **mixed economy** differ? A **traditional economy** relies on habit, custom, or ritual to decide what to produce, how to produce it, and to whom distribute it to.In a **market economy,** economic decisions are made by individuals and are based on exchange, or trade. Planned economies are **command economies.** Market based economic systems in which government plays a limited role are called **mixed economies.** 3.) Why aren't people paid the same amount in **factor payments** for the resources they provide? Provide your own example of two unequal factor payments. They aren't paid the same because sometimes the property or the resource they are providing isn't worth a lot. Like a house Those that rent out houses sometimes have small houses that probably have a lot of problems so there cheap. The bigger ones with big rooms or bathrooms or everything will obviously cost more. 4.)Why do governments provide **safety nets** for their citizens? Governments provide **safety nets** in case of injuries, layoffs, natural disasters or severe shortages. 5.) Give at least one example of a traditional, a command, and a market system. a Traditional: when the son grows up he takes up the same job as his father a command: communism the government decides who does what a market: capitalism the people decide individually 6.)Examine the graph ' Government spending, by Category" on page 543. Based on the information in the graph, identify what you think are some of the economic goals of the United States. We focus a lot on health care, social security, and national security. 7.)