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Answer the 3 following questions
1. Three possible causes of an economic crisis (recession) are underconsumption, profit squeeze,
and over-investment. Choose any two of those three and explain how each of the two you have
chosen can cause an economic crisis
2.Compared with earlier economic systems, capitalism is much more dynamic. Explain the
underlying reasons why the quantity and quality of economic output and the productivity of labor
normally increase over time in a capitalist economic system. One important contributing factor
for economic growth is improvement in the education and training of the labor force. Explain
why the profit motive of the capitalists does not automatically assure that education and training
of workers is upgraded over time?
3.Explain how a market system can allocate resources in an economy, determining how much of
each product will be produced. What are the advantages of the market method of allocation?
What disadvantages does it have?
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