Get Guided Reading Activity Lesson 3 The Global Transition To Capitalism Answer Key

Key Takeaways Capitalism has many unique features, some of which include a two-class system, private ownership, a profit motive, minimal government intervention, and competition.

An economic system is any system of allocating scarce resources. Economic systems answer three basic questions: what will be produced, how will it be produced, and how will the output society produces be distributed? There are two extremes of how these questions get answered.

They are: economic freedom, voluntary (willing) exchange, private property rights, the profit motive, and competition.

In a capitalist economy, capital assets—such as factories, mines, and railroads—can be privately owned and controlled, labor is purchased for money wages, capital gains accrue to private owners, and prices allocate capital and labor between competing uses (see “Supply and Demand”).

The five characteristics of pure capitalism are private ownership and control of property and economic resources, free enterprise, competition, freedom of choice, and the possibility of profits.

Command economy relies on government officials to answer the three basic economic questions. Officials called – central planners/ decide on what will be produced and made. Individuals have little or no say in economic choices.

However, these countries did face challenges in transitioning to a market economy, including: Poor existing infrastructure. Erratic trade imbalances. Leery foreign investment. Lagging privatization of state-owned businesses. Rising prices from deregulation. Lack of market economy regulations.