Unit1

Part A

Directions:

Read the following four texts. Answer the questions below each text by choosing A, B, C or D. Mark your answers on ANSWER SHEET 1. （40 points）

Text 3

There are various ways in which individual economic units can interact with one another. Three 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 commodities from other economic units or sell commodities to them. In a market, transaction may take place via barter or money exchange. In a barter economy, real goods such as automobiles, shoes and pizzas are traded against each other. Obviously, finding somebody who wants to trade my old car in exchange for a sailboat 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.