ECO 232 Chapter 29 Quiz
____ 20. An economic system that answers the What, How, and For Whom questions using prices determined by the interaction of the forces of supply and demand is a: a. market economy. b. command economy. c. traditional economy. d. none of the above.
A
____ 28. An economic system characterized by private ownership of the factor of production and economic activity coordinated through a system of markets and prices is called: a. capitalism. b. socialism. c. communism. d. none of the above.
A
____ 3. Which of the following economic systems answers the basic economic questions by copying the previous generation? a. Traditional economy. b. Command economy. c. Market economy. d. Capitalism.
A
____ 44. According to Adam Smith's invisible hand doctrine: a. self-interest best serves the interests of society. b. laissez faire must be improved by government intervention. c. producers should serve the best interests of society. d. only laissez faire mercantilism best serves the interests of society.
A
____ 49. In the late 1980s and early 1990s, Russia, Poland, and other countries adopted economic reforms to make the transition toward capitalism. When these reforms were enacted: a. prices for consumer goods increased. b. shortages developed. c. unemployment was dramatically reduced. d. foreign investment fell.
A
____ 5. In a command economy, the basic economic questions are answered by: a. central authority. b. individual buyers and sellers. c. the traditional methods. d. none of the above.
A
____ 50. Karl Marx was a(an): a. 19th century German philosopher. b. 18th century Russian economist. c. 14th century Polish banker. d. 19th century Russian journalist.
A
____ 51. Karl Marx published: a. Das Kapital. b. General Theory of Communism. c. The Wealth of Nations. d. Capitalist Manifesto.
A
____ 53. In Japan, the government agency that combines government and businesses in joint ventures is called: a. METI. b. GOSPLAN. c. JEEOC. d. KEIRETSU.
A
____ 54. Which of the following is a commonly cited reason for the postwar success of the Japanese economy? a. High savings and investment rates. b. Strong antitrust laws. c. Worker mobility. d. laissez-faire government policies.
A
____ 55. In Adam Smith's competitive market economy, the question of what goods to produce is determined by the: a. "invisible hand" of the price system. b. "invisible hand" of government. c. "invisible hand" of public interest. d. "visible hand" of laws and regulations.
A
____ 11. What famous economist said, "By pursuing his own interest he (an individual) frequently promotes that of the society more effectually than when he really intends to promote it?" a. Alfred Marshall. b. Adam Smith. c. Karl Marx. d. Robert L. Heilbroner.
B
____ 12. Adam Smith, in his book, The Wealth of Nations, advocated: a. socialism. b. an economy guided by an "invisible hand." c. government control of the "invisible hand." d. the adoption of mercantilism.
B
____ 13. Adam Smith's book The Wealth of Nations was published at the time of the: a. Great Depression. b. U.S. Declaration of Independence. c. U.S. Civil War. d. War of 1812.
B
____ 14. What famous economist said that the market economy seemed to be controlled by an invisible hand? a. Alfred Marshall. b. Adam Smith. c. Karl Marx. d. Robert L. Heilbroner.
B
____ 15. A strength of the market economy is that: a. it results in an equal distribution of wealth. b. resources are used efficiently. c. planners rather than consumers determine answers to the basic economic questions. d. information for production and distribution decisions passes directly from the and the government to buyers.
B
____ 19. Which of the following is true in a market economy? a. Central planners determine answers to the basic economic questions. b. Resources are used efficiently. c. The distribution of wealth is equal. d. Information for production and distribution decisions pass directly to buyers from the government.
B
____ 21. The economic system in which the basic economic questions are answered through markets with some government intervention is a: a. command economy. b. mixed economy. c. market economy. d. planned economy.
B
____ 35. Socialism is an economic system characterized by: a. private ownership of resources and market decision-making. b. government ownership of resources and centralized decision-making. c. cooperation, sharing, and little central government. d. a complex structure of rules and traditions that dictates decision-making.
B
____ 36. Under socialism, factories, farms, mines, and natural resources are owned by: a. laborers. b. government. c. private stockholders. d. no one.
B
____ 4. Which of the following societies is the most likely to have a traditional economy? a. The United States. b. The Inuit (native people of Northern Canada). c. Cuba under Castro's rule. d. Modern-day Hong Kong.
B
____ 42. Adam Smith's book, The Wealth of Nations, was published at the time of the: a. War of 1812. b. U.S. Declaration of Independence. c. U.S. Civil War. d. Great Depression.
B
____ 8. The economic systems of the former Soviet Union, the People's Republic of China, and Cuba are best classified as: a. traditional economies. b. command economies. c. market economies. d. decentralized economies.
B
____ 9. Proponents of a command economy argue that it promotes: a. efficiency. b. equity. c. consumer sovereignty. d. economic growth.
B
____ 17. In a market economy: a. collective decision-making is more important than individual decision-making. b. goods and services are distributed as if by an "invisible hand" to those who can not afford them. c. profit provides an incentive to be productive. d. the distribution of wealth is equitably distributed.
C
____ 18. What type of economic system is commonly described as being controlled by an "invisible hand"? a. A traditional economy. b. A command economy. c. A market economy. d. A communist economy.
C
____ 23. Which of the following is not a characteristic of capitalism? a. Private ownership of the factors of production. b. Businesses make their own product and price decisions. c. Public ownership of the factors of production. d. Decentralized decision-making using markets.
C
____ 24. Which of the following is a characteristic of capitalism? a. Equality of income. b. Government decision-making is preferred to decentralized decision-making. c. Market determination of prices and quantity. d. Government ownership of all capital.
C
____ 25. Property rights allowing individuals to own goods, services, and factors of production are most important in: a. socialistic economies. b. planned economies. c. capitalistic economies. d. command economies.
C
____ 30. Which of the following is a characteristic of capitalism? a. Government ownership of all capital. b. Government decision-making is preferred to decentralized decision-making. c. Market determination of prices and quantity. d. Equality of income.
C
____ 34. Which of the following applies to a real-world socialistic economy? a. Private ownership of all factors of production. b. Government ownership of all factors of production. c. Government ownership of most of the factors of production. d. Lack of central planning.
C
____ 38. Which of the following is a characteristic of socialism? a. Rejection of central planning. b. Government ownership of all factors of production. c. Government ownership of most of the factors of production. d. Private ownership of all factors of production.
C
____ 39. Which of the following statements best describes the role played by prices in a command economy such as the former Soviet Union? a. Prices were used to allocate resources. b. Prices played the same role as in a market economy. c. Prices were used to ration final goods and services but not to allocate resources. d. None of the above statements is descriptive.
C
____ 40. In the former Soviet economy, the supreme planning board that transmitted economic decisions down to producing and consuming units was called the: a. Soviet Ministry. b. Polit Bureau. c. Gosplan. d. Soviet Central Committee for Economic Planning.
C
____ 41. Adam Smith was an advocate of: a. mercantilism. b. a nation maximizing its stock of gold. c. unrestricted or free trade. d. the visible hand of public interest.
C
____ 43. Adam Smith wrote that the: a. economic problems of eighteenth-century England were caused by free markets. b. government should control the economy. c. pursuit of private self interest promotes the public interest in a market economy. d. public or collective interest is not promoted by people pursuing their self interest.
C
____ 46. Which of the following is not an idea advocated by Adam Smith? a. Businesspersons conspiring to fix prices is a threat to the price system. b. Pursuit of private self interest with an invisible hand is the best way to promote the public interest. c. Government should control the economy. d. The government should provide for national defense and little else.
C
____ 48. Which of the following is not a characteristic of capitalism? a. Private ownership of resources. b. Decentralized decision-making using markets. c. Representative democracy. d. Consumer sovereignty.
C
____ 57. Which of the following statements is true? a. The United States today comes closer to the socialist form of economic organization than it does capitalism. b. When central planners set prices above equilibrium for goods and services they create shortages. c. According to Karl Marx, under capitalism, workers would be exploited and would revolt against the owners of capital. d. Adam Smith argued that government's role in society would be to do absolutely nothing.
C
____ 1. An economic system is the organizations and methods used to determine: a. what goods and services are produced. b. how goods and services are produced. c. for whom goods and services are produced. d. all of the above.
D
____ 10. Adam Smith's basic economic philosophy stated in The Wealth of Nations can be stated as: a. laissez faire. b. allow to act. c. the least government is best. d. all of the above.
D
____ 16. In a market economy, buyers and sellers communicate their intentions to one another through: a. government planners. b. negotiations overseen by government agencies. c. elected officials. d. prices.
D
____ 2. Which of the following is a basic question by an economic system? a. for whom goods and services are produced. b. how goods and services are produced. c. what goods and services are produced. d. all of the above.
D
____ 22. Which of the following economies is an example of a mixed system? a. The United States. b. The United Kingdom. c. Sweden. d. All of the above.
D
____ 26. Which of the following is a criticism of capitalism? a. Unequal distribution of income. b. Failure to protect the environment. c. Implications of complete consumer sovereignty. d. All of the above.
D
____ 27. Which of the following is one common criticism of capitalism? a. Poor product quality and little product diversity. b. Inefficiency of nationalized industries. c. Inability to adjust quickly to changing economic conditions. d. Inadequate environmental protection.
D
____ 29. Which of the following statements is true? a. The doctrine of laissez-faire advocates an economic system with extensive government intervention and little individual decision-making. b. In capitalism income is distributed on the basis of need. c. Adam Smith was the father of socialism. d. Most real-world economies are mixed economic systems. e. The "invisible hand" refers to government economic control.
D
____ 31. Which of the following is a correct characterization of socialism? a. Tradition answers the basic economic questions. b. Markets are used exclusively to answer the basic economic questions. c. Central planning is used exclusively to answer the basic economic questions. d. Government ownership of many resources and centralized decision-making answers the basic economic questions.
D
____ 32. Under socialism, which of the following industries would probably be owned by the government? a. Steel. b. Electricity. c. Agriculture. d. All of the above.
D
____ 33. In a socialistic system, most economic decisions are made by: a. firms. b. consumers. c. stockholders. d. government planners.
D
____ 37. Socialism is correctly described by which of the following statements? a. Central planning is used exclusively to answer the basic economic questions. b. Markets are used exclusively to answer the basic economic questions. c. Tradition answers the basic economic questions. d. Government ownership of many resources and centralized decision-making answers the basic economic questions.
D
____ 45. According to Adam Smith, what is the primary source of a nation's wealth? a. The amount of gold and silver in the government's possession. b. A spirit of cooperation in which people share according to their means. c. Strong central planning authorities. d. The people's ability to produce products and trade in free markets.
D
____ 47. Which of the following statements is true? a. The doctrine of laissez-faire advocates an economic system with extensive government intervention and little individual decision-making. b. In capitalism income is distributed on the basis of need. c. Adam Smith was the father of socialism. d. Most real-world economies are mixed economic systems. e. The "invisible hand" refers to government economic control.
D
____ 52. Which nation achieved the ideal communist society as described by Marx? a. Castro's Cuba. b. Mao's China. c. Stalin's Soviet Union. d. No nation has achieved Marx's vision of communist society.
D
____ 56. In Marx's ideal communist society, the state: a. actively promotes income incentives. b. follows the doctrine of laissez faire. c. owns resources and conducts planning. d. does not exist.
D
____ 7. Who was one of the first proponents of employing market economies instead of command economies? a. Robert Heilbroner. b. Karl Marx. c. Jeffrey Sachs. d. Adam Smith.
D
____ 6. Which of the following statements is true about a command economy? a. Shortages occur because of complexities in the planning process. b. Planners determine what, how many, and for whom goods and services are to be produced. c. Planners often allocate goods and services through a rationing system. d. The quality of produced goods and services tends to be inferior. e. All of the above are true.
E
____ 58. In a traditional economy, innovation is encouraged.
F
____ 61. A traditional system operates based on the self interest of buyers and sellers.
F
____ 65. The command system relies on prices set by firms on the basis of consumer demands.
F
____ 66. Adam Smith argued that government should actively intervene in market to improve economic performance.
F
____ 67. A market system does not operate based on self-interest.
F
____ 68. A mixed economy cannot exist without a politically free society.
F
____ 75. Economic efficiency and economic freedom are commonly cited as two major benefits of socialism.
F
____ 79. Adam Smith believed that the pursuit of the public interest is also the best way to promote the private self interest.
F
____ 80. Adam Smith believed that a nation would produce the maximum wealth by relying on government to make public interest economic decisions.
F
____ 81. Government involvement has become so prevalent in the U.S. economy that the U.S. economy is now generally considered to be a socialist economy.
F
____ 82. Government involvement has become so prevalent in the U.S. economy that the U.S. economy is now generally considered to be a socialist economy.
F
____ 83. Under socialism, no markets can operate at all.
F
____ 84. Karl Marx's massive work, titled Das Kapital, was published in 1848.
F
____ 85. In Karl Marx's view, people under the ideal state of communism would be motivated by the principle "from each according to his ability, to each according to his enterprise."
F
____ 86. Karl Marx envisioned communism as an economic system that blends the best elements of capitalism and socialism.
F
____ 59. In traditional economies, people base economic decisions on the precedents established by previous generations.
T
____ 60. A traditional system solves basic economic questions by long-standing customs.
T
____ 62. In a command economy, resources are publicly owned by government and economic activity is coordinated through a central government planning authority.
T
____ 63. Centralized planning agencies are a key feature of command economies.
T
____ 64. A command system uses a group of planners or central authority to make basic economic decisions.
T
____ 69. Most real world economies are mixed economies.
T
____ 70. In the real world, countries use a mixture of the three basic types of economic systems.
T
____ 71. Most real world economies are mixed economies.
T
____ 72. The basic characteristics of a pure capitalist system include the private ownership of the means of production and economic activity being coordinated through a system of markets and prices.
T
____ 73. One of the strengths of a socialist economy, according to those who advocate such a system, is that government intervention will enable a more equitable distribution of income.
T
____ 74. One of the strengths of a socialist economy, according to those who advocate such a system, is that government intervention will enable a more equitable distribution of income and therefore goods and services produced.
T
____ 76. Karl Marx predicted that the exploitation of workers would cause capitalism to self-destruct.
T
____ 77. In Marx's ideal state of communism there would be no haves and have-nots.
T
____ 78. When the official price for goods and services is below the equilibrium price in a market, prices no longer perform their rationing function efficiently.
T
____ 87. Karl Marx viewed socialism only as a transition to the ideal state of communism.
T
1. The economic system that answers the What, How and For Whom questions by central authority is a:
command economy
1. The economic system that answers the What, How and For Whom questions using prices determined by the interaction of supply and demand is a:
market economy.
1. The economic system that has the benefit of cooperation among individuals but suffers from a lack of individual initiative that leads to greater production describes the:
traditional economy.
