General Educational Development (GED) Civics Practice Exam

The economic system in the United States operates as capitalism, also referred to as a market economy. In this framework, private individuals and businesses own the means of production and operate for profit. The prices of goods and services are determined through supply and demand dynamics in the marketplace, promoting competition and innovation.

In a capitalist system, individuals have the freedom to make economic choices, such as starting a business or choosing their employment, which encourages efficiency and consumer satisfaction. This system supports private property rights, where individuals can own and use their assets as they see fit, creating an environment for economic growth.

Understanding capitalism's role in the U.S. economy involves recognizing how it contrasts with other systems. Unlike socialism, where the government has significant control over the economy and resources are shared more equally among the population, capitalism emphasizes individual ownership and entrepreneurial endeavors. Feudalism, which was prevalent in medieval Europe, is not applicable to contemporary economic discussions, given that it was characterized by a rigid class structure and land ownership held by lords. The barter system, though an ancient method of trade that relies on direct exchange of goods and services without money, does not represent a modern or efficient economic structure in a complex economy like that of the United States. Thus, capitalism is the