Question 4
Social market economy means that the economy …
German original: Soziale Marktwirtschaft bedeutet, die Wirtschaft …. In the test, all questions are asked in German.
Answer options
- regulates itself solely according to supply and demand.
- is planned and controlled by the state, with supply and demand not being taken into account.
- is guided by demand from abroad.
- is guided by supply and demand, but the state ensures social balance. — Correct answer
Explanation
The social market economy combines a free market (supply and demand determine prices) with social compensation (social insurance, minimum wage, workers' rights). The model was shaped by Ludwig Erhard after 1945.
Key terms in this question
- economy — The economy includes all activities related to the production, sale, and purchase of goods and services, as well as the businesses and people involved in them.
- social — 'Social' describes everything related to people living together and supporting each other in a society. Social institutions or services help people who are in need.
- market economy — A market economy is an economic system in which prices and production are determined by supply and demand. The government intervenes only to a limited extent in economic activity.