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There are various ways in which individual economic units can interact with one another. These basic ways may be described as the market system, the administered system, and the traditional system.
In a market system individual economic units are free to interact among each other in the marketplace. It is possible to buy goods from other economic units or sell goods to them. In a market, transactions may take place through barter or money exchange. In a barter economy, real goods such as automobiles, shoes, and rice are traded against each other. Obviously, finding somebody who wants to trade my old car in exchange for a sail-boat may not always be an easy task. Hence, the introduction of money as a medium of exchange eases transactions considerably. In the modern market economy ? goods and services are bought or sold for money.
An alternative to the market system is administrative control by some agency over all transactions. This agency will issue commands as to how much of each goods and service should be produced, and consumed by each economic unit. Central planning may be one way of running such an economy. The central plan, drawn up by the government, shows the amounts of each goods produced by the various firms and shared among different households for consumption. This is an example of complete planning of production, consumption, and exchange for the whole economy.
In a traditional society, production and consumption patterns are governed by tradition; every person's place within the economic system is fixed by fatherhood or motherhood, religion, and custom. Transactions take place on the basis of tradition, too.
26. The main purpose of the passage is______.
A. to outline different types of economic systems
B. to explain the science of economics
C. to argue that one economic system is better than the others
D. to compare barter and money-exchange markets
27. In the second paragraph, the word "real" could best be replaced by______.
A. high quality B. special
C. actual • D. exact
28. Which of the following statements is TRUE according to the passage?
A. The author prefers the market system to either the administered system or the traditional system.
B. In an administered system only the government makes decision.
C. In a market economy services can be sold or bought.
D. The traditional system is good for a society which asks for little progress.
29. According to the passage, a barter economy can lead to______.
A. rapid speed of transaction B. misunderstanding
C. inflation D. difficulties for traders
30. According to the passage, who has the greatest degree of control in an administered system?
A. Individual household. B. Major corporations.
C. Small businesses. D. The government.
