Econ. Chapter 2 Test Review

A black market is a. one requiring large amounts of capital relative to labor. b. one in which goods are sold illegally. c. one that has been nationalized by government decision. d. one that has been privatized by government decision

b. one in which goods are sold illegally.

Which country is an example of a capitalist country? a. Cuba b. Singapore. c. Venezuela d. North Korea

b. Singapore.

An example of a country that is resisting capitalism is a. Sweden. b. Venezuela. c. China. d. Poland.

b. Venezuela.

An example demonstrating how mind-sets must change in order to transition to capitalism is a. governments need to exercise more control over industry than before. b. people have to learn to make their own decisions in a free market. c. more economic decisions need to be made by a central planning authority. d. labor unions need to be eliminated

b. people have to learn to make their own decisions in a free market.

Which type of economy has a disadvantage in that it produces low-quality goods? a. All types of economies are disadvantaged this way b. Market c. Traditional d. Command

d. Command

What type of economy is most common worldwide? a. Traditional b. Command c. Communist d. Mixed

d. Mixed

Which type of economy is best able to adjust to change over time? a. Traditional b. Market. c. Socialist d. Command

Market

What conclusion can be drawn about capitalism from South Korea's economic growth in the late 20th century? a. Capitalism can restore a damaged economy. b. There is no real difference between socialism and capitalism. c. Socialism can revive an economy over a prolonged period of time. d. A transition from capitalism to a command economy can involve struggle

a. Capitalism can restore a damaged economy.

How does a traditional economy answer the basic questions of WHAT, HOW, and FOR WHOM to produce? a. Customs, traditions, and the elders decide WHAT, HOW, and FOR WHOM to produce. b. The government decides WHAT, HOW, and FOR WHOM to produce. c. Consumers decide WHAT, HOW, and FOR WHOM to produce. d. Society decides WHAT, HOW, and FOR WHOM to produce.

a. Customs, traditions, and the elders decide WHAT, HOW, and FOR WHOM to produce.

Which of the following is a disadvantage of a market economy? a. It sustains a high degree of uncertainty. b. It restricts personal freedom. c. It discourages creativity and new ideas for doing things. d. It does not allocate resources as efficiently as other types of economies

a. It sustains a high degree of uncertainty.

Why did Sweden move from socialism to a more mixed economy in the 1980s? a. Its citizens objected to the nation's high rate of taxation. b. Its citizens demanded that elements of communism be adopted. c. Its government decided that welfare and health benefits were no longer needed. d. Its government decided that opening the country's petroleum industry would boost the

a. Its citizens objected to the nation's high rate of taxation.

Which statement describes why the people in a nation with a command economy might resist a shift to a free market economy? a. People who hold political power are threatened by fundamental changes. b. Workers are reluctant to give up their participation in a classless society. c. Workers are reluctant to accept complete government control of their economy. d. Factory and business owners are reluctant to place their capital under worker authority.

a. People who hold political power are threatened by fundamental changes.

What's a key difference between a command economy and socialism? a. The government of a command economy owns all of the productive resources, whereas the government of a socialist economy owns just some. b. The government makes all production decisions in a socialist economy, whereas in a command economy the government makes some, but not all, production decisions. c. They are identical economic systems; socialism is just a more modern term. d. Socialism is based on tradition and sharing , whereas a command economy is based on the decisions of a central authority.

a. The government of a command economy owns all of the productive resources, whereas the government of a socialist economy owns just some.

What is the key similarity between a command economy and socialism? a. The major economic decisions are made by government for the people, not by the people. b. The major economic decisions are made by the people and government. c. Both aim to primarily enhance the welfare of its leaders first. d. Individuals own most of the resources in both types of economies

a. The major economic decisions are made by government for the people, not by the people.

Which is NOT an advantage of a mixed market economy? a. A high degree of individual freedom b. A high degree of uncertainty. c. Ability to adjust gradually to change over time

b. A high degree of uncertainty.

Which of these is an accurate statement about mixed economies today? a. There are more mixed economies in the world than any other kind. b. Very few economies today can be accurately described as "mixed." c. Mixed economies exist mostly in nations with communist governments. d. Most nations that once had a mixed economy have evolved into command economies

a. There are more mixed economies in the world than any other kind.

Which of the statements best describes the communist ideal? a. a classless society in which everyone works for the common good. b. a classless society in which workers are motivated by financial incentives c. a society in which the working class is motivated by incentives to produce goods d. a society in which a small ruling class administers resources for the common good

a. a classless society in which everyone works for the common good.

The term describing forced common ownership of factors of production is a. collectivization. b. privatization. c. unionization. d. inflation

a. collectivization.

A state in which everyone contributes according to their abilities and consumes based on their needs a. has never existed. b. existed in the USSR. c. exists today in North Korea. d. exists today in Cuba

a. has never existed.

The level of government involvement in a mixed economy can best be described as a. varied. b. very controlling. c. hands-off or laissez-faire. d. indifferent.

a. varied.

A factor contributing to the spread of capitalism across the world is that a. world-wide media connections allow everyone to be aware of capitalism's benefits. b. moving to a capitalist system is always a smooth transition. c. most of those with political power in the old system are eager to bring capitalism for everyone. d. people are eager to see their country's industries nationalized

a. world-wide media connections allow everyone to be aware of capitalism's benefits.

Why is China considered a mixed economy? a. Its economy includes complete government control over production. b. Its economy includes government control as well as market and tradition. c. Its economy is based on communist ideals of contribution and consumption. d. Its economy has little government regulation and is mainly traditional

b. Its economy includes government control as well as market and tradition.

Programs that provide services for the public using taxpayer dollars are often considered a. communist. b. socialist. c. free market. d. mixed market.

b. socialist.

Who makes the decisions in a command economy? a. Elders and tradition b. Individuals c. A king or ruler with absolute power d. Consumers

c. A king or ruler with absolute power

Why do mixed economies grow faster than traditional economies? a. Because they rely on guidance and practices of elders b. Because they rely on opportunity cost c. Because they embrace reforms like allowing private property and using markets d. Because they provide fewer services for the needy

c. Because they embrace reforms like allowing private property and using markets

Which is NOT something that Japan and South Korea have in common? a. Emphasis on technological innovation b. Government planning for growth and support of industries c. Boards of directors regulating competition between firms. d. Focus on products to export to other nations

c. Boards of directors regulating competition between firms.

What is one advantage of a mixed market economy in a democracy? a. The government controls the productive resources. b. Citizens face high tax rates so that they can have services. c. Citizens can vote to help those in need economically. d. The government avoids helping those in need.

c. Citizens can vote to help those in need economically.

Which of these statements apply to present-day Sweden? a. Its taxation and unemployment rates are relatively low. b. Its unemployment rate and GDP per capita are relatively low. c. Its unemployment rate and GDP per capita are relatively high. d. Its GDP per capita and welfare payout rates are both relatively low

c. Its unemployment rate and GDP per capita are relatively high.

Who affects the choices of all in a market economy? a. The government b. Private business owners c. No one group affects the choices of others. d. Sellers

c. No one group affects the choices of others.

Which is a modern example of a command economy? a. Inuit of Northern Canada b. United States c. North Korea d. African Mbuti

c. North Korea

Which of the following is an example of the advantages of capitalism? a. Nationalization of industries in Venezuela b. Centralized planning similar to the model used by Gosplan c. Strong economic growth in countries such as Germany, South Korea, and the United States d. Collectivization of agriculture leading to great efficiencies

c. Strong economic growth in countries such as Germany, South Korea, and the United States

What kind of economy offers uniformity in wages regardless of individual productivity? a. all economies b. traditional economies c. command and socialist economies d. market and free-enterprise economies

c. command and socialist economies

In the "communist" economies that exist today, a. no government controls the state, so the economy runs on its own. b. governments allow businesses to determine the answers to economic questions. c. governments exert great control over the economy. d. a classless society determines the answers to economic questions

c. governments exert great control over the economy.

Which of the following describes a move away from capitalism? a. Sweden's 1980s cutback on social programs b. the transformation of the former Soviet Union to today's Russia c. the nationalization of major industries in Hugo Chavez's Venezuela d. economic reforms following the Great Depression in the United States

c. the nationalization of major industries in Hugo Chavez's Venezuela

Who did Karl Marx believe would be the beneficiaries of socialism? a. property owners b. the government c. workers. d. capitalists

c. workers.

Which of the following describes an example of privatization? a. The government is prevented from accessing citizens' personal information. b. Companies are prevented from accessing citizens' personal information. c. Certain industries are operated by the government to try to benefit all citizens. d. Formerly state-owned companies are sold or given to citizens

d. Formerly state-owned companies are sold or given to citizens

What's a main disadvantage of a traditional economy? a. Traditional economies tend to have a higher standard of living than other types of economies. b. Sharing is a valued practice in a traditional economy c. Everyone knows their role to play in the economy. d. Individuals who act differently, break the rules, or try something new are punished

d. Individuals who act differently, break the rules, or try something new are punished

What is the main difference between Japanese capitalism and capitalism in the United States? a. Japan's government regulates private firms to keep competition at a minimum. b. Japan does not permit the sale of corporate stock. c. Japan has a more dedicated and loyal workforce. d. Japan's government is highly involved in day-to-day business management

d. Japan's government is highly involved in day-to-day business management

A market economy allows buyers and sellers to do what? a. Follow consumer traditions b. Interact with government officials to demand production c. Commonly own all resources in the economy d. Make their own decisions regarding what to buy or what to sell

d. Make their own decisions regarding what to buy or what to sell

Which statement describes a disadvantage of a command economy? a. Items tend to be produced solely for the sake of profit. b. It cannot "change direction" easily if the need arises to do so. c. It does little to help the less advantaged obtain the goods and services they need. d. Nothing stops the government from producing things that people don't need or want.

d. Nothing stops the government from producing things that people don't need or want.

What's a benefit of having privately owned resources in a market economy? a. The wealthy own public resources. b. Private owners don't have an incentive to provide enough goods and services to meet all public and private needs. c. Private ownership means a high degree of certainty since each owner can be assured they have no competition. d. People take better care of productive goods and resources when they actually own them.

d. People take better care of productive goods and resources when they actually own them.

How is the principle of "There's No Such Thing As A Free Lunch" illustrated in a socialist economy? a. Socialist economies tend to collapse when they become too large. b. The marketplaces in a socialist economy are free for anyone to enter. c. Socialist policies offer advantages to the wealthy at the expense of those less well-off. d. Socialist economies tend to offer extensive government services but have high tax rates

d. Socialist economies tend to offer extensive government services but have high tax rates

A capital-intensive approach is best suited to a. preparing food. b. manufacturing hand-made artisan goods. c. providing health-care services. d. factory and industrial work.

d. factory and industrial work.

A group of companies controlled together by a board of directors in order to regulate competition is referred to as a. perestroika. b. a black market. c. a capital-intensive method. d. keiretsu

d. keiretsu

There are many mixed economies in the world today because a. people wanted more government control over production and distribution of goods and services. b. government wanted less control over the production and distribution of goods and services. c. people thought that socialism would evolve into communism. d. people wanted benefits that strictly traditional, capitalistic, or communist economies did not provide.

d. people wanted benefits that strictly traditional, capitalistic, or communist economies did not provide.