Econ and Personal Finance Chapter 6 Test
In what kind of an economy does the government make all the decisions? a. centrally planned b. free enterprise c. mixed d. laissez-faire
A
Which of the following is the main incentive for a manufacturer to sell a product? a. helping the economy grow b. making profits on sales c. putting others out of business d. pleasing the consumer
B
an economy that relies on habit, custom, or ritual to answer economic questions
traditional economy
The ways in which factors of production are combined determines the answer to which economic question? a. How will goods be produced? b. Who will consume goods? c. What will be produced? d. How can we provide a safety net?
A
What does the expression "the customer is king" mean in a free market economy? a. Customers have the power to decide what gets produced. b. In a service economy, the customer is always right. c. Producers of goods are also customers. d. People with the most money are treated like royalty.
A
Which of the following is NOT a type of economic system? a. Democracy c. Mixed b. Free Market d. Centrally planned
A
Which of the following is NOT one of the 6 key principles of economic thinking? a. All choices cost money c. People's choices have consequences for the future b. People gain when they trade voluntarily d. People create economic systems that influence choices and incentives
A
You take off work to attend a family event. Whle you are driving to the event you get a flat tire. It takes a while to get the tire fixed and you miss the event. What is an implicit cost that you paid? a. The money you could have earned had you not taken off c. The clothes you bought for the event b. The cost of the gas to drive to the event. d. The repair cost of the tire
A
The United States government intervenes in the economy in order to a. protect laissez-faire. b. promote the general welfare. c. impose barriers on foreign trade. d. provide competition for private firms.
B
What "invisible hand" regulates the free market economy? a. specialization b. competition and self-interest c. incentive and efficiency d. competition between firms
B
What does the process of specialization do for an economy? a. It fosters competition. b. It makes production more efficient. c. It makes labor easier to control. d. It eliminates unemployment.
B
What is one important advantage of a free market? a. It protects the less fortunate. b. It encourages growth. c. It is easy to regulate. d. It distributes goods equally.
B
To improve its standard of living, a nation's economy must a. allow the central government to make economic decisions. b. remain stable. c. grow through innovation. d. reach economic equity.
C
Where are traditional economies usually found? a. in large communities that are able to deal with environmental disaster b. in small communities that welcome change c. in small communities that avoid change d. in large communities that welcome change
C
Which of the following philosophers argued that a free market would regulate itself with little government involvement? a. Karl Marx b. Friedrich Engels c. Adam Smith d. Vladimir Lenin
C
Why do people need to buy and sell products or services? a. We need to maintain a competitive society. b. People need to provide the market with goods and services. c. No one is self-sufficient. d. People need to buy and sell products to make a profit.
C
A town votes to raise taxes on its households and businesses in order to renovate a school in one of its poorest neighborhoods. What societal goal best explains rhis decision? a. freedom b. efficiency c. growth d. equity
D
How is the U.S. government involved in the factor market? a. It buys paper from firms. b. It purchases telephones and computers. c. It tells businesses and firms what to purchase. d. It pays wages to government employees.
D
What do people supply in return for factor payments? a. innovation, labor, or trade b. services, goods, or traditions c. innovation, profit, or goods d. land, labor, or capital
D
What does "consumer sovereignty" mean in a free market economy? a. Producers of goods are also customers. b. People with the most money are treated like royalty. c. The customer is always right. d. Customers have the power to decide what gets produced.
D
Which of the following is a characteristic of a traditional economy? a. It is usually based on light industrial production. b. It encourages innovation and change. c. It has a high standard of living. d. It revolves around the family unit.
D
Which of the following is characteristic of a centrally planned economy? a. The central government enforces laissez-faire policies. b. The central government allows the market to set wages for jobs. c. The central government lets factories set their own goals. d. The central government makes all economic decisions.
D
consumers have power over what is produced
consumer sovereignty
the method used by a society to produce and distribute goods and services
economic system
the income people receive for supplying factors of production
factor payments
a hope of reward that encourages someone to behave in a certain way
incentive
the process of bringing new methods, products, or ideas into use
innovation
a system to protect people experiencing unfavorable economic conditions
safety net
an individual's personal gain
self-interest
the level of economic prosperity
standard of living
