Self Check and Speedback 4

Capitalism is a free-market system built on all of the following notions EXCEPT ________. the right to earn a profit in return for individual effort arbitrary property rights private ownership of assets private control of investment

arbitrary property rights

The statement that summarizes all economic transactions between a country and the rest of the world during a given period of time is the ________. balance of trade balance of international transactions balance on goods, services, and investments balance of payments

balance of payments

The United Nations' ________ measures life expectancy, educational attainment, and the standard of living in a given country. Happy Planet Index Genuine Progress Indicator Gross National Happiness Human Development Index

Human Development Index

________ is a general, sustained rise in prices measured against a standard level of purchasing power. Reflation Inflation Expansion Deflation

Inflation

Critics of freer markets are most likely to claim which of the following? A freer market does not lead to higher per capita incomes. Freer markets are not correlated with higher growth rates. Freer markets do not encourage the accumulation of powerful self-interests. A freer market skews income distribution and fosters inequality.

A freer market skews income distribution and fosters inequality.

People in ________ have greater economic freedom than those in ________. Asia; Europe South America; North America South America; Europe North America; Asia

North America; Asia

________ involves the sale and legal transfer of government-owned resources to private interests. Privatization Renationalization Deregulation Antitrust legislation

Privatization

Some countries opt for a mixed economic system in the belief that although an economic system should aspire to achieve the efficiencies created by free markets, it must also support policies needed to ________. harness economic growth destabilize poverty rates achieve low unemployment inequitably distribute wealth

achieve low unemployment

In computing GNI, the value of a Ford car that is manufactured in Mexico using capital from the United States would ________. be added to the GNI of the United States as well as the GNI of Mexico be added to the GNI of the United States but not the GNI of Mexico not be added to the GNI of the United States but would be added to the GNI of Mexico only affect the computation of GDP and have no bearing on GNI

be added to the GNI of the United States but not the GNI of Mexico

Communism champions a ________ system built on state ownership of all economic factors of production and control of all economic activity. centrally planned competitively planned publicly planned market-planned

centrally planned

In a ________, all dimensions of economic activity, including pricing and production decisions, are determined by a central government plan. command economy market economy mixed economy democracy

command economy

In a market economy, the patterns of resource allocation are most directly influenced by ________. government administrators who monitor the equilibrium of supply and demand alliances among key consumer groups that negotiate with companies to improve the quality of the purchasing process industry coalitions that strive to improve the efficiency of production consumers who "vote" by their personal decision to buy or not buy products

consumers who "vote" by their personal decision to buy or not buy products

The two main categories in the balance of payments are the ________. merchandise trade account and the capital account merchandise exchange account and the services account current account and the capital account income receipts and payments on assets account and the unilateral transfers account

current account and the capital account

The transition to a different economic system follows a(n) ________ process in every country. identical different random systematic

different

A worrisome outcome of chronic inflation is that it tends to ________. erode confidence in a country's currency lead to lower demand, triggering lower prices and eventually lower employment increase the real income of people, thereby inflating their expectations give central banking officials excessive flexibility to manage monetary policy

erode confidence in a country's currency

Uneven income distribution ________. is largely a problem for poorer nations primarily affects people in urban settings is limited to a small share of the world population exists in almost every country

exists in almost every country

In a command economy, the goods and services that a country produces, the quantity in which they are produced, and the prices at which they are sold are planned by ________. government officials individual entrepreneurs local trade associations private industries

government officials

An economic system is the set of structures and processes that ________ in a country. guides the allocation of resources and shapes the conduct of business activities directs the movement of specific products to specific consumers sets the standards of competitive success for companies in the economy stipulates the roles and responsibilities of consumers

guides the allocation of resources and shapes the conduct of business activities

The so-called "misery index" is the sum of a country's ________. external and internal debt inflation and unemployment rates unemployment level and total debt trade deficit and inflation rate

inflation and unemployment rates

In the Economic Freedom Index, ________ exhibit high economic freedom whereas ________ exhibit little to no economic freedom. market economies; command economies mixed economies; market economies command economies; market economies centrally planned economies; command economies

market economies; command economies

A system in which individuals, rather than the government, make the majority of economic decisions is commonly referred to as a ________. market economy command economy centrally planned economy mixed economy

market economy

In a ________ economy, certain sectors of the economy are left to private ownership and free market mechanisms, while other sectors have significant state ownership and government planning. market state-directed mixed command

mixed

Gross national income (GNI), the broadest measure of economic activity for a country, is defined as ________. the income generated by both total domestic production and the international production activities of national companies the total of all economic activity in one country less services, such as government administration, health services, and education the income generated in one country, regardless of who owns the productive assets the total of all consumption and investment that takes place in a national economy

the income generated by both total domestic production and the international production activities of national companies

History suggests that if the economic crisis worsens, we are likely to see more people question ________. the legitimacy of capitalism the correlation between economic freedom and environmental stability the legitimacy of communism the practicality of mixed economies

the legitimacy of capitalism

In the United States, U3 is the official unemployment rate. This rate provides a measure of which of the following? all of these options those who have stopped looking for work because current economic conditions lead them to believe no work is available those who want to work full-time but are only able to find part-time employment due to economic conditions those who are not working but are willing and able to work for pay, currently available to work, and actively searching for work

those who are not working but are willing and able to work for pay, currently available to work, and actively searching for work