Question 1

A society's economic system is defined by:

Accepted Answer

A)   the degree of scarcity it faces.
B)   the way in which basic economic decisions are made.
C)   the forms into which its businesses are legally organized.
D)   its type of government; that is, whether it has a dictatorship or a democracy.

Question 2

Market failure occurs when:

Accepted Answer

A)   a small number of sellers dominate a market.
B)   buyers have inadequate information to make economic decisions.
C)   cost-minimizing decisions by businesses create problems for society.
D)   all of the above.

Question 3

On the basis of the following continuum, economic changes in Eastern Europe, the former Soviet Union, and China since the mid-1980s would be most appropriately

Accepted Answer

A)   A to point
B)   B to point A.
C)   B to point C.
D)   D to point B.

Question 4

Society often turns to the government to correct a market failure.

Accepted Answer

A) True 
 B)False

Question 5

There is no difference between a market economy and a planned economy in how income is distributed.

Accepted Answer

A) True 
 B)False

Question 6

In the circular flow model:

Accepted Answer

A)   resources go from businesses to households in input markets.
B)   income flows to households from businesses in output markets.
C)   households are buyers and businesses are sellers in input markets.
D)   businesses are sellers and households are buyers in output markets.

Question 7

During President George W. Bush's and President Barack Obama's administrations:

Accepted Answer

A)   the national debt continued to decline.
B)   health care spending which had been increasing for years began to fall.
C)   future funding for Social Security no longer was an issue with increased contributions.
D)   the trend toward less government intervention during the Bush administration was reversed with the Obama administration. D

Question 8

Which of the following is an example of market failure?

Accepted Answer

A)   Workers are treated unequally because of race, gender, or other discrimination.
B)   Buyers lack adequate information to make knowledgeable decisions about which goods and services to purchase.
C)   Competition drives sellers out of markets, leaving buyers with fewer sellers from whom to purchase and causing them to pay higher prices.
D)   All of the above. D

Question 9

Economies that rely on historical, social, political, or religious arrangements are classified as:

Accepted Answer

A)   mixed economies.
B)   market economies.
C)   planned economies.
D)   traditional economies.

Question 10

The idea of individual decision making popularized by Adam Smith in the late 1700s provided the foundation for:

Accepted Answer

A)   mercantilism.
B)   U.S. capitalism.
C)   Chinese socialism.
D)   the economy of the former Soviet Union. B

Question 11

The "dark side"of the Industrial Revolution included all of the following EXCEPT:

Accepted Answer

A)   low pay.
B)   long hours.
C)   poor working conditions.
D)   exclusion of women and children from the workforce.

Question 12

Market economies tend to produce goods and services efficiently because:

Accepted Answer

A)   profit incentives are a driving force behind business production decisions.
B)   information required for production decisions passes directly between buyers and sellers via prices.
C)   both of the above.
D)   none of the above.

Question 13

In a planned economy:

Accepted Answer

A)   free enterprise is the prevailing philosophy.
B)   goods and services are usually produced more efficiently than in a market system.
C)   value judgments of individual buyers and sellers are more important than value judgments of planners.
D)   how goods and services are produced is determined by what resources planners make available to producers.

Question 14

An assumption of laissez-faire capitalism is that the wealth of a nation will be increased:

Accepted Answer

A)   by maintaining minimal government interference in its economy.
B)   by relying on free and open competition to regulate business dealings.
C)   if individuals are left relatively free to pursue their economic interests.
D)   all of the above.

Question 15

By producing its product using the least-cost method, a seller is:

Accepted Answer

A)   using the smallest number of resources.
B)   necessarily producing the poorest quality product.
C)   producing in the way that allows for the greatest profit.
D)   all of the above.

Question 16

The granting to individuals the property rights to factors of production that were once collectively owned, or owned by the state, is:

Accepted Answer

A)   referred to as privatization.
B)   an important element in the transformation from a planned to a market economy.
C)   necessary if individuals, rather than the state, are to organize resources and take risks.
D)   all of the above.

Question 17

In a planned economy, economic decisions are made by individual buyers and sellers.

Accepted Answer

A) True 
 B)False

Question 18

Since the mid-1980s, many economies such as the Soviet Union and China have:

Accepted Answer

A)   closed their markets and have relied more heavily on government planning.
B)   been relying more on free markets.
C)   curtailed the use of private property rights.
D)   pushed for more state control over what goods and services should be produced.

Question 19

Circular flow model.
 
-In a pure market economy, the government would be represented by:

Accepted Answer

A)   box A.
B)   box C.
C)   boxes A and C.
D)   none of the above.

Question 20

In a circular flow model of a market economy, households:

Accepted Answer

A)   sell goods to businesses in input markets.
B)   buy goods from businesses in input markets.
C)   sell resources to businesses in input markets.
D)   buy resources from businesses in input markets.

Exam 2: Economic Decision Making and Economic Systems

A society's economic system is defined by:

Correct AnswerverifiedShow Answer

Market failure occurs when:

Correct AnswerverifiedShow Answer

On the basis of the following continuum, economic changes in Eastern Europe, the former Soviet Union, and China since the mid-1980s would be most appropriately

Correct AnswerverifiedShow Answer

Society often turns to the government to correct a market failure.

Correct AnswerverifiedShow Answer

There is no difference between a market economy and a planned economy in how income is distributed.

Correct AnswerverifiedShow Answer

In the circular flow model:

Correct AnswerverifiedShow Answer

During President George W. Bush's and President Barack Obama's administrations:

Correct AnswerverifiedD

Which of the following is an example of market failure?

Correct AnswerverifiedD

Economies that rely on historical, social, political, or religious arrangements are classified as:

Correct AnswerverifiedShow Answer

The idea of individual decision making popularized by Adam Smith in the late 1700s provided the foundation for:

Correct AnswerverifiedB

The "dark side"of the Industrial Revolution included all of the following EXCEPT:

Correct AnswerverifiedShow Answer

Market economies tend to produce goods and services efficiently because:

Correct AnswerverifiedShow Answer

In a planned economy:

Correct AnswerverifiedShow Answer

An assumption of laissez-faire capitalism is that the wealth of a nation will be increased:

Correct AnswerverifiedShow Answer

By producing its product using the least-cost method, a seller is:

Correct AnswerverifiedShow Answer

The granting to individuals the property rights to factors of production that were once collectively owned, or owned by the state, is:

Correct AnswerverifiedShow Answer

In a planned economy, economic decisions are made by individual buyers and sellers.

Correct AnswerverifiedShow Answer

Since the mid-1980s, many economies such as the Soviet Union and China have:

Correct AnswerverifiedShow Answer

Circular flow model. -In a pure market economy, the government would be represented by:

Correct AnswerverifiedShow Answer

In a circular flow model of a market economy, households:

Correct AnswerverifiedShow Answer

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D

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D

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B

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