Economics Ch 1 and 2 Test Review
Worst period of economic decline in U.S. history, lasting from approximately 1929 to 1939
Great Depression
Comprehensive, centralized economic strategy for achieving rapid industrialization, used by the Soviet Union and China
Great Leap Forward
Which of the following is a disadvantage of a market economy?
It sustains a high degree of uncertainty.
Why did Sweden move from socialism to a more mixed economy in the 1980s?
Its citizens objected to the nation's high rate of taxation.
Which of these statements apply to present-day Sweden?
Its unemployment rate and GDP per capita are relatively high.
Independently owned group of Japanese business firms united to regulate competition
Keiretsu
The South's rainy season
Land
The most comprehensive measure of a nation's wealth is provided by its
gross domestic product.
What kind of economy offers uniformity in wages regardless of individual productivity?
market and free-enterprise economies
Which type of economy is most prevalent in the world today?
mixed
A can of soup is an example of a
nondurable good.
The amount of output in a specific amount of time with a given amount of resources is referred to as
productivity.
The efficient use of scarce resources leads to an increase in
productivity.
Which of the following descriptions best explains the meaning of opportunity cost?
the cost of choosing one alternative over another
Dave gets a job at a grocery store, which pays him an hourly wage in exchange for his labor. Dave is participating in
the factor market.
Which of the following describes a move away from capitalism?
the nationalization of major industries in Hugo Chavez's Venezuela
Opportunity cost refers to
the value of the next best alternative.
When deciding how to use resources, you need to evaluate the costs and benefits of each choice to decide which meets your criteria. These are called
trade-offs.
Which statement describes a disadvantage of a command economy?
Nothing stops the government from producing things that people don't need or want.
Which of these helps explain why mixed economies develop?
People become unhappy with aspects of their current economy.
Which statement describes why the people in a nation with a command economy might resist a shift to a free market economy?
People who hold political power are threatened by fundamental changes.
Fundamental restructuring of the Soviet economy, introduced by President Mikhail Gorbachev
Perestroika
Conversion of state-owned property to individual ownership
Privatization
How is the principle of "There's No Such Thing As A Free Lunch" illustrated in a socialist economy?
Socialist economies tend to offer extensive government services but have high tax rates.
Which of these is a major advantage of a market economy?
There is a high degree of individual freedom.
Certificate used to purchase government-owned property during privatization
Voucher
Which of the statements best describes the communist ideal?
a classless society in which everyone works for the common good
When a nation's total output increases over time, the nation is experiencing
a decrease in gross domestic product.
Which of the following helps determine something's value?
both A(Utility) and C(Scarcity)
Which of the factors of production involves taking risks and combining resources to produce a good or service?
entrepreneurs
Which of the following is a feature of Japanese capitalism that would be illegal in the United States?
keiretsu
Which of these is the most striking example of the costs and risks of pure capitalism?
the Great Depression
Consumers are powerful because
they have more rights than corporations.
The study of economics involves
All Of The Above.(explaining how people deal with scarcity.) (studying how things are made, bought, sold, and used.) (explaining how incomes are earned and how jobs are created).
A car is an example of a
durable good.
Which of the following explains why products made under a command economy are more likely to be low quality?
The workers who make them have little incentive to make them well.
Which of these is an accurate statement about mixed economies today?
There are more mixed economies in the world than any other kind.
System in which economic activity is the result of ritual, habit, or custom
Traditional economy
Which of the following would result in a change in the production possibilities frontier in the mythical country Alpha?
ALL OF THE ABOVE(an influx of immigrants from other countries) (the discovery of an abundant natural resource) (a long drought)
Which of the following is a feature of a command economy that distinguishes it from a socialist economy?
All production is managed by the government.
Mixed economies can evolve when societies with different kinds of economies interact. (T/F)
True
Socialist economies include aspects of both command and free-enterprise systems. (T/F)
True
There is always some degree of government involvement in a mixed economy. (T/F)
True
Which of these economic systems have the least in common?
command economy and capitalism
Which of the following lists economic systems in order from least to most flexible?
command, socialism, free market
When a business needs to decide whether a certain action is worth the cost, the most helpful analysis would be a(n)
cost-benefit analysis
Economic sector in which goods and services are sold illegally
Black market
Computers used to produce magazine articles
Capital
Requiring large amounts of investment in equipment in relation to labor
Capital-intensive
What conclusion can be drawn about capitalism from South Korea's economic growth in the late 20th century?
Capitalism can restore a damaged economy.
Which nation today is the most striking example of successful privatization?
China
Forced common ownership of factors of production
Collectivization
Economic system in which a central authority makes the major economic decisions
Command economy
Economic and political system in which factors of production are owned and directed by the state
Communism
Economic system in which private citizens own and use resources to make a profit
Economic system
Efficient way of allocating resources and producing and distributing goods and services in a society
Economic system
Developer of a new smartphone app
Entrepreneurs
Successor of the European Coal and Steel Community, established in 1993
European Union (EU)
Where all of the factors of production are bought and sold
Factor market
Communist countries like North Korea and Cuba are examples of mixed economies. (T/F)
False
Mixed economies work to the degree that they embrace democracy. (T/F)
False
Gross domestic product on a per person basis
GDP per capita
Central planning authority in the former Soviet Union
Gosplan
Which of these statements is descriptive of a market economy?
Major economic decisions are made by individuals, not for them
Mechanism through which buyers and sellers of an economic product or service come together
Market
System in which economic activity is driven by supply, demand, and the price system
Market economy
System that has some combination of traditional, command, and market economies
Mixed economy
Economic shift from private ownership to government ownership
Nationalization
Which of these statements describes a disadvantage of a traditional economy?
New ways of doing things are discouraged.
Which of these countries has an economy most similar to that of the former Soviet Union?
North Korea
In a transitioning economy, why would privatization tend to raise a nation's overall standard of living?
People are more likely to be productive when it benefits them personally.
Which of the following is a cause of struggle in the process of privatization?
People must adjust to the costs and risks that are part of capitalism.
Number of people per square mile of land area
Population density
Represents the range of production possibilities
Production possibilities curve
Which of the following states an advantage of a traditional economy?
Property rights are based on tradition.
A fundamental problem in every society
Scarcity
Which country is an example of a capitalist country?
Singapore
System in which government owns and controls some factors of production
Socialism
Independent Polish labor union founded in 1980 by Lech Walesa
Solidarity
Which of the following represents a place where the transition to capitalism is nearly complete but far from fully effective?
South Korea
Each worker learns one task very well
Specialization
Quality of life
Standard of living
Which of the following could raise the cost of production in a command economy?
a large and inefficient bureaucracy
In which of these systems is the government most likely to provide people with goods and services they could not otherwise afford?
a socialist economy
A nation's wealth is determined by its
accumulation of all tangible products.
A nation's wealth is made up of
all tangible items.
Paradox of value refers to the
high value of a nonessential item and the low value of an essential item.
Division of labor is practiced because
it increases efficiency by ensuring that workers become good at specific tasks.
Consumers are expected to read the full information about a product before making a purchase. This is an example of a consumer's
responsibilities.
Consumers waiting in long lines for a new product is an example of
scarcity.
Societies are faced with which three basic questions about production of goods?
what, how, and for whom
Who did Karl Marx believe would be the beneficiaries of socialism?
workers
How are economic transactions shaped in a traditional economy?
Elders and ancestors make certain that things are done in specific ways.
Chinese strategy used to quickly revolutionize industrial agriculture and production
Five-Year Plan
Which of the following statements best describes the purpose of the production possibilities curve?
It identifies all possible combinations of goods and services an economy can produce.
Which of the following is the best description of the economic system in Cuba?
It is a command economy with a strong central authority.
In the mythical country Alpha, an entrepreneur has introduced a new technology that makes manufacturing twice as efficient as before. How is this likely to affect the production possibilities frontier?
It would expand the frontier.
What is the main difference between Japanese capitalism and capitalism in the United States?
Japan's government is highly involved in day-to-day business management.
A third-grade teacher
Labor
The manager of a car repair shop
Labor
