Economics Chapter 2 Review

A grocery store with few choices is found is most likely found in a nation with a market economy

False

Because capitalism is practiced in the United States, misleading advertising is permitted.

False

Innovation and new ideas are rewarded in a nation with a traditional economy.

False

Most entrepreneurs become extremely wealthy.

False

Nations with a command economy are known for having many entrepreneurs.

False

Capitalism thrives because of competition.

True

In a nation with a market economy, the consumer decides which products will be successful.

True

North Korea has a command economy.

True

People on a fixed income are adversely affected by inflation.

True

The United States has a mixed market economy.

True

A disadvantage of a market economy is: a. basic services for all citizens are not provided b. there is great motivation to create new goods and services c. the economy can change direction quickly and drastically d. citizens have the freedom to choose their employers

a. basic services for all citizens are not provided

What is an advantage of a command economy? a. basic services such as healthcare can be provided to all citizens b. innovation and new ideas result in great wealth for entrepreneurs c. starvation is impossible d. the production of consumer goods is a top economic priority

a. basic services such as healthcare can be provided to all citizens

In a nation with a market economy, workers are free to: a. choose their employer b. set their salary or wage c. take office supplies home d. take as many paid vacation days as they want.

a. choose their employer

An economic system in which a central authority makes all economic decisions a. command economy b. traditional economy c. market economy d. free enterprise economy

a. command economy

In economic terms, property means a. everything an individual owns and the labor he/she provides b. everything an individual owns but not the labor he/she provides c. some things an individual owns and the labor he/she provides d. some things an individual owns but not the labor he/she provides

a. everything an individual owns and the labor he/she provides

With capitalism, which action might reduce unemployment? a. increase hiring at private firms b. adjust central planning c. increase government-owned resources d. increase government-controlled investments

a. increase hiring at private firms

The economic decisions of central planners often are wrong because they have little understanding of a. local economic conditions b. bureaucracies c. Karl Marx's theories d. democracy

a. local economic conditions

Freedom of economic choice is one of the chief advantages of a a. market economy b. command economy c. communist economy d. traditional economy

a. market economy

With capitalism, the allocation of goods and resources is determined by a. market forces b. centralized planning c. government policy d. traditional customs

a. market forces

Well-defined and actively-enforced private property rights are necessary to the efficient operation of markets work because they prove that a person a. owns what he or she is selling b. has the right to buy c. will make a profit d. will satisfy his or her wants

a. owns what he or she is selling

Force that encourages people to start businesses and attempt to improve their material well-being a. profit motive b. capitalism c. consumer sovereignty d. voluntary exchange

a. profit motive

The way a society uses scarce resources to satisfy its people's unlimited wants is called an economic a. system b. utility c. incentive d. grid

a. system

The act of buyers and sellers freely conducting business in a market a. voluntary exchange b. free market system c. profit motive d. fraud

a. voluntary exchange

In the United States, _________________ has been set up to provide disability and retirement benefits to workers. a. Communism b. Social Security c. Welfare d. WIC

b. Social Security

Bureaucrats deciding what products should be sold in stores is a feature of a a. traditional economy b. command economy c. market economy d. capitalist economy

b. command economy

The idea that consumers rule the market a. capitalism b. consumer sovereignty c. private property rights d. "the customer is never right"

b. consumer sovereignty

A country that is printing $100,000,000,000,000 bills probably has what problem? a. too many rich and successful people b. inflation c. fixed incomes d. a market failure

b. inflation

A general rise in prices is known as a. fixed incomes b. inflation c. capitalism d. voluntary exchange

b. inflation

Producers and consumers drive the economy of a a. mixed economic system b. market economic system c. command economic system d. traditional economic system

b. market economic system

Building a new home on your land is an example of: a. inflation b. private property rights c. a command economy d. traditional economics

b. private property rights

The right and privilege to control one's own possessions a. capitalism b. private property rights c. profit motive d. Consumer sovereignty

b. private property rights

The disastrous famine in North Korea was the result, in great part, of the government's efforts to develop a. new trade bloc b. stronger military c. market economy d. large middle class

b. stronger military

Which of the following is an example of a nation with a traditional economy? a. the national government has mandated that 100,000,000 tons of butter be produced each year b. techniques used for growing wheat have been unchanged for centuries c. due to high fuel prices, many fuel-efficient cars are being produced d. economic authorities have ordered industry to produce tanks and heavy weaponry instead of food

b. techniques used for growing wheat have been unchanged for centuries

In a country with a mixed market economy, what actions may government prevent? a. open competition among car manufacturers b. the addition of dangerous narcotics in children's cough syrup c. a reduction in fuel prices d. the bankruptcy of a small business

b. the addition of dangerous narcotics in children's cough syrup

An economic system in which ritual, habit, and custom dictate most economic and social behavior a. command economy b. traditional economy c. market economy d. free enterprise economy

b. traditional economy

A system in which the factors of production are owned by private citizens a. command economy b. traditional economy c. capitalism d. free enterprise economy

c. capitalism

Government officials deciding the distribution of all resources is a feature of a a. mixed economy b. market economy c. command economy d. traditional economy

c. command economy

The situation in which the money a person receives does not increase even though prices rise. a. inflation b. economic system c. fixed income d. deflation

c. fixed income

With capitalism, which of the following do market forces reward? a. productivity and government ownership of resources b. underutilization and government ownership of resources c. productivity and private ownership of resources d. underutilization and private ownership of resources

c. productivity and private ownership of resources

The struggle among producers and sellers to attract consumers is known as: a. profit motive b. inflation c. communism d. competition

d. competition

In a market economy, the real power in the market place is held by the a. producer b. seller c. government d. consumer

d. consumer

A society's organized way of providing for its people's needs and wants a. command economy b. inflation c. capitalism d. economic system

d. economic system

With voluntary exchange, a buyer and seller agree to do business together a. only for the benefit of the seller b. only for the benefit of the buyer c. for the mutual benefit of both d. for the benefit of neither

d. for the benefit of neither

A characteristic of a market economy is: a. central economic planning by the government b. use of traditional farming methods c. consumer goods often not available d. little government interference in the economy

d. little government interference in the economy

Entrepreneurs establish businesses in order to: a. purchase products at greatly reduced prices b. not have to answer to a boss c. take as many vacation days as they can d. make money

d. make money

What is the main goal of most people in a nation that has a traditional economic system? a. to make a significant profit b. to produce weapons instead of consumer goods c. to produce innovative new products that improve the quality of life d. to survive and not starve to death

d. to survive and not starve to death

The situation where women tend crops and raise children while men hunt is often found in a a. mixed economy b. market economy c. command economy d. traditional economy

d. traditional economy

A grocery store shows the influence of competition when a. no brands of peanut butter are on the store shelf b. one brand of peanut butter is on the store shelf c. two brands of peanut butter with the same price are on the store shelf d. two brands of peanut butter with different prices are on the store shelf

d. two brands of peanut butter with different prices are on the store shelf