QUESTIONS FOR FURTHER THOUGHT AND DISCUSSION 1. The circular flow model is a simplified version of our economy. Describe how this model works. Page 76 2. What are the three basic economic questions that all economies must answer? Describe the differences in the ways capitalism and socialism answer these questions. 3. What was Adam Smith's invisible hand, and what economic function did it serve? 4. What are the two basic classes of market failure? What would be an example of each? 5. Can you think of any other government failures in addition to those listed in the chapter? 6. How far has China evolved into a market economy? To what degree has this evolution contributed to China's economic growth? 7. For many years Americans referred to the People's Republic of China as "Communist China." Why would that label be misleading today? 8. Explain why you would prefer to live in a socialist or a capitalist country. 9. Practical Application: Conduct your own investigation of government waste. Go to Google.com, type in "government waste," and compile a list of wasteful spending projects. 10. Practical Application: If you were on a presidential commission whose purpose was to deal with spamming and robocalling, what recommendations would you make? 11. Should public colleges be free