What Is the Economic System of the United States? Civics Question 12

The answer is capitalism.

Question 12 asks for the economic system of the United States. Two answers count: “capitalism” and “a free market economy.” This is a starred question, so it can also show up on the shorter test for applicants who are 65 or older.

What the Answer Describes

In a capitalist economy, businesses, land and tools are owned by people and companies rather than by the government. Someone who saves money can start a shop, hire workers and keep what the shop earns.

In a free market, prices are set by buyers and sellers instead of by government order. If shoppers want more of something, the price rises and more sellers make it. If nobody wants it, the price falls or the product disappears.

The two terms point at the same system from different sides. Capitalism describes who owns things. Free market describes how prices and choices get made.

Why the Officer Asks This

Most of the civics test covers government: the branches, elections, rights. This question covers the other half of how the country is organized.

It connects to the rights questions too. Owning property, choosing your own work and running your own business are daily freedoms, and they depend on the economic system this question names.

How to Remember the Economic System

Both accepted answers carry the same idea, and it is the word free.

A free market means you are free to choose: what to buy, what to sell, what work to take. Capitalism comes from capital, which means money and property, and in this system capital is held by people rather than the state.

Link it to something you already know about the country: free country, free market. One phrase, and either accepted answer follows from it.

Common Ways People Get This Wrong

The most common miss is answering “democracy.” Democracy is a form of government and belongs to question 1. This question asks about the economy, and the two are graded separately.

The other miss comes from economics class. Terms like “mixed economy” are used in textbooks, but they are not on the accepted list for this question. Stay with capitalism or free market economy.

What to Say on Test Day

Say “capitalism.” One word.

If the word slips, “free market economy” is marked correct as well. Say one of the two and stop there.