Name: _________________________________________________ Period: _____ Date: __________ US GOV
Ch. 1.4: Economic Theories – Guided Reading
Complete the following Guided Reading as you read the entire chapter; do not simply skim for the answers.
Read “Economic Theories” on p.26
The Role of Economic Systems:
1. What three economic decisions must each government decide?
Capitalism:
2. What are the five (5) main characteristics of capitalism?
3. How did free trade in Europe during the thirteenth century impact the continents economy?
4. Explain the relationship between “buyers” and “sellers” in a free-enterprise economy:
5. Explain how competition plays a role in a free-enterprise economy:
6. Is the United States a purely capitalistic economic system?
7. Explain one way that the government’s influence in the economy has increased:
8. It has been said that, “Even though it is a mixed-market economy, the American economic system is
rooted deeply in the idea of individual initiative. What does this mean?
Socialism:
9. What three (3) major goals is socialism set to accomplish?
10. Explain one argument against socialism:
Communism:
11. What did Karl Marx believe would happen in a true communist economy?
12. Who own the land, natural resources, industry, banks, and transportation in a communist economy?
Critical Thinking:
13. Which economic system do you think works best for supporting democratic values that we have in
the United States? Be sure to support your answer with evidence/examples.
Vocabulary:
1. Economics –
2. Capitalism –
3. Free market –
4. Laissez-faire –
5. Socialism –
6. Bourgeoisie –
7. Proletariat –
8. Communism –
9. Command economy –