Lesson 3.3-Sample Homework Answers
Lesson 3.3-Sample Homework Answers
Q1: Compare the pros and cons of three types of economic systems.
Market economy (capitalism)
· Individuals and businesses (market forces) decide on what goods and services are produced and for what price
· The government has little involvement in business
· People and businesses are encouraged to own private property
· Profit is encouraged
· Competition is needed. Companies compete on quality, services, price, reputation, and warranties.
· No country is completely a market economy because there’s always some government intervention, but the USA is pretty close to a market economy.
Centrally planned economy
· The government controls all elements of the economy, including what is produced, the price, and wages.
· The government also provides necessary service such as health care, education, jobs, and housing to all citizens.
· No one can own private property. The government owns all property and employs people.
· All profit belongs to the government. The government reinvests that profit into social programs such as education, health care, and military.
· Competition is limited because the government owns everything.
· Examples: North Korea, Cuba
Mixed Economy
· Somewhere in between capitalism and communism
· Example: Canada. The government gives lots of social programs, but there’s also a thriving business environment.
· Property can be owned by individuals, businesses, or the government.
· Profit is encouraged but there’s high taxes to support government projects and social programs
· There’s strong competition between businesses, and often, the government also competes with private businesses
Economic system | Pros | Cons |
Market Economy | · Efficient use of resources · Innovation · Lower prices · Good quality products | · Large wealth gap · Businesses can be unethical · Lack of consumer education |
Centrally Planned Economy | · Assured a minimum standard of living for all · Strong social programs · No unemployment · Stable | · Lack of freedom · Little motivation to work hard · Lack of innovation · Possible government corruption |
Mixed Economy | · Individual incentive to work hard and innovate · Basic social services provided by the government · Consumer protection | · High taxes · Government intervention might slow growth · Less motivation to work hard if you don’t care about growth |
Q2: Compare the pros and cons of the two common types of political systems.
Political system | Pros | Cons |
Democracy (accompanies a market economy) | · Citizens’ voice is heard · Each citizen is entitled to an education · Economic opportunity for each citizen | · Politicians may care more about being re-elected than on what is best for the country, thus focusing on short-term solutions rather than long-term solutions. · Politicians often get funding from corporations, so they try to make corporations happy instead of citizens. · Difficult to establish · Expensive to maintain (court expenses) |
Autocracy (usually accompanies a centrally planned economy) | · Ruler thinks for the whole country rather than just a few corporations who have funding power · Ruler thinks about the long-term benefits for the country rather than short-term solutions | · Often has military oppressing citizens, controlling media, business, and religion · Citizens often cannot give the government any feedback · Citizens aren’t allowed to travel outside the country |
Q3: Do you think Bhutan’s idea to measure Gross National Happiness instead of GDP is a good idea? Why?
Pros
· Acknowledges that the role of government is ultimately to serve the citizens and give them a good life
· Much less likely to result in unethical business practices
Cons
· Hard to measure accurately
Q4: Compare the characteristics of underdeveloped, developing, and developed countries.
Underdeveloped countries:
Countries with severe poverty and bad living standards. They lack social services and infrastructure. They have low literacy rates. The economy is mostly agriculture and resource-based. There’s often long-term political issues such as war and corruption.
Developing countries:
These countries have improving literacy rates, access to health care, and technology advancement. There is a movement towards industrialization. People are moving from rural places to cities.
These countries provide opportunities for international businesses to come in and develop infrastructure. They are start having enough purchasing power to import from developed countries.
These countries are also a place where developed countries often hire labor from because labor costs are lower. They often have weak legal systems and work regulations.
Developed countries:
These countries have high GDP, literacy rates, technology, and health care. They create a diverse range of products. They are predominantly tertiary industries.
Q5: How do time zones affect international business?
The international business world is open 24 hours a day thanks to emails and video calls.
Many call centres in North America outsource labor to India, resulting in Indian employees having to work at night to answer calls from North America in their daytime.