Free enterprise, or the free market, signifies an economy where the market, not the government, determines prices, products, and services. This economic concept promotes minimal governmental control, centering the regulation of commercial activities on private measures.
Key Takeaways: 🇺🇸✨🌍
Related Terms: capitalism, laissez-faire, private property rights, market efficiency, voluntary exchange.
References
- United States Treasury. “Troubled Assets Relief Program (TARP)”.
Get ready to put your knowledge to the test with this intriguing quiz!
---
primaryColor: 'rgb(121, 82, 179)'
secondaryColor: '#DDDDDD'
textColor: black
shuffle_questions: true
---
## What is another term for a free enterprise system?
- [ ] Command economy
- [ ] Socialist economy
- [x] Market economy
- [ ] Barter economy
## Which of the following characteristics is a hallmark of a free enterprise system?
- [ ] Centralized government control
- [ ] No private property
- [x] Voluntary exchange
- [ ] Fixed pricing by the state
## What role does competition play in a free enterprise system?
- [ ] It is discouraged to maintain stability
- [ ] It is irrelevant to economic growth
- [x] It drives efficiency and innovation
- [ ] It is controlled by the government
## How are prices determined in a free enterprise system?
- [ ] By government agencies
- [x] Through supply and demand
- [ ] By international bodies
- [ ] Based on historical data only
## What motivates businesses to perform efficiently in a free enterprise system?
- [ ] Rewards from government subsidies
- [ ] Imposing taxes on losses
- [ ] External regulations
- [x] Profit maximization
## Which of the following is a natural outcome of a free enterprise system?
- [ ] Monopoly power without government intervention
- [x] Business cycles of expansion and contraction
- [ ] Absence of market risk
- [ ] Uniform income distribution
## In a free enterprise system, who decides what goods and services should be produced?
- [ ] The government
- [ ] International organizations
- [x] Consumers and producers
- [ ] Centralized authorities
## What effect does a free enterprise system typically have on consumer choice?
- [ ] Decreases available options
- [x] Increases competition and variety
- [ ] Standardizes all products
- [ ] Eliminates unusual products
## Which form of regulation is most compatible with a free enterprise system?
- [ ] Complete absence of regulations
- [ ] Extensive government intervention
- [x] Limited, light-touch regulation
- [ ] Controlling all business activities
## Which amendment is commonly associated with the principles underlying the free enterprise system in the United States?
- [ ] Second Amendment – Right to Bear Arms
- [ ] First Amendment – Freedom of Speech
- [x] Fifth Amendment – Protection of Private Property
- [ ] Eighth Amendment – Prohibition of Cruel and Unusual Punishments
