What defines a free market economy?

An economic system with extensive government involvement in economic activities.

An economic system with minimal government intervention in economic activities.

An economic system where market forces play no role in determining economic outcomes.

An economic system where the government controls all economic activities.

What role do market forces play in a free market economy?

They have no influence on economic outcomes.

They are heavily regulated by the government.

They determine economic outcomes through supply and demand.

They are restricted to certain industries only.

What are the fundamental economic questions that determine an economic system?

How to spend government revenue, how to regulate industries, how to allocate resources.

What to produce, how to produce, for whom to produce.

Which companies to nationalize, how to set wages, how to manage inflation.

How to distribute wealth, how to control imports, how to fund social programs.

What is a characteristic of a market economy?

Heavy government regulation of prices.

Centralized planning of production.

Private ownership of resources.

Which statement best describes the advantages of a free market economy?

Guaranteed income equality among citizens.

High level of government control over production decisions.

Efficient allocation of resources based on demand.

What is a potential disadvantage of a market economy?

Limited incentives for innovation.

High degree of government interference.

Guaranteed employment for all citizens.

Market Economic System Free MCQ Practice Test with Solutions

	Economics for GCSE/IGCSE 71 videos\|82 docs\|39 tests

	Economics for GCSE/IGCSE 71 videos\|82 docs\|39 tests

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