Economics Module 2

Tariffs are taxes on ______ _____.

imported goods

The sum total of all the buyers and sellers in a specific area is known as a(n) _______.

market

Choose the best answer to fill in the blank: When we begin with the understanding of what God says about human nature, we can build government and economic systems that allow humans to reach their full potential, while at the same time limiting the effects that their _______ nature will have on their actions.

sinful

A government incentive or tax break designed to assist a specific industry is known as a _______.

subsidy

What was the principal purpose of The Wealth of Nations?

to explain why some nations possessed great wealth and others did not

Which religious philosopher discussed economics and government in Institutes on the Christian Religion?

John Calvin

Communism and socialism are examples of _________ economic systems.

Marxist

In economics, people who create goods and services are known as ___________.

Producers

Command economy

Resources are owned and controlled by the government.

What example does Smith use to show that switching from one task to another can cause a lot of lost time?

The country weaver and farmer traveling from his loom to his field.

Summa Theologica was written by

Thomas Aquinas

In the early 1990s, PepsiCo introduced a new soda called Crystal Pepsi. Sales for Crystal Pepsi were so low that within a few years PepsiCo stopped producing it. What characteristic of a market economy is illustrated in this scenario?

consumer sovereignty

The idea that the desires of consumers determine what goods and services producers create is called _____________.

consumer sovereignty

What is Adam Smith known as the father of?

Father of Economics

Which of the following are true, according to a biblical worldview?

Humans are able to control their environment, including their economic systems. Humans are fallen and inherently sinful.

Communism is a __________ economic system.

Marxist

What is the title of the first chapter in The Wealth of Nations?

Of the Division of Labour

Market economy

Resources are controlled by the people

Traditional Economy

Resources are used the way they've always been used.

French economist Frederic Bastiat wrote that "the good economist takes into account both the effect that can be _________ and those effects that must be _______."

Seen forseen

Which nation's command economy was largely responsible for a famine that killed millions in the 1930s?

Soviet Union

Why is profit motive an important characteristic of a market economy?

Without a worthwhile reward, no one would take the risks required to develop new products.

People who purchase goods and services are called _________.

consumers

The two market forces that determine prices in a market economy are supply and ________.

demand

Adam Smith argues that the greatest improvement in the productivity of labor has come about because of the effects of ________.

division of labor

The separation of a task into different, individual processes is _________

division of labor

Which of the following are economic theories that Adam Smith supports and argues for in The Wealth of Nations? (choose all that apply)

division of labor free trade

Which of the following functions does a government perform in a market economy? (choose all that apply)

ensures healthy competition protects consumers and workers safeguards personal property rights

Adam Smith argued that if people were allowed to act in their own self-interest, the marketplace would be directed by an "invisible _____."

hand

Marxist economic systems rely on the flawed view of humanity that ___________________.

humans are generally good, but they are made evil by society's bad influence

Proponents of mercantilism believed that wealth is fixed and _______.

limited

When one organization has complete control over one industry, they are said to have a ________.

monopoly

According to Adam Smith, division of labor helps workers improve their _______ more quickly.

performance

In the first chapter of The Wealth of Nations, what type of factory did Adam Smith use as an example of division of labor?

pin factory

Which of the following are characteristics of a market economy?

private ownership competition

According to a biblical worldview, humans are inherently __________.

sinful

In The Wealth of Nations, Adam Smith argues that division of labor reduces _______________.

the amount of time lost by switching from one task to another

According to Adam Smith, a notable advantage of division of labor is that it facilitates _____________.

the invention of new machinery

Not all negative events in market economies are caused on purpose by greedy companies trying to get away with something. Pollution and other environmental damage are often the result of _________ consequences.

unintended

The Wealth of Nations was published in ______.

1776

The pin-making factory split the process of making a pin into __________ different tasks.

18

What are the three advantages Smith says comes from division of labor?

It facilitates the discovery of newer methods for improving efficiency, most notably the invention of new machinery. It helps worker improve their performance more quickly. It reduces the amount of time switching from one task to another.

Let's pretend we live and work on a large corn plantation with 200 other workers. We will each receive an equal portion of the harvest, regardless of how long we work on growing the crops. Given what we've learned about human nature, what would most likely happen at the farm?

Because there's no reward for working hard, most workers are lazy, resulting in a very poor harvest.

Mixed economy

Combines elements of command and market economies.

Which of the following are economic theories that Smith supports and argues for in The Wealth of Nations?

Competition Limited Government The invisible hand

Why did Adam Smith believe competition was an important part of a prosperous economy?

Competition keeps prices in check. Competition encourages businesses to use resources efficiently.

In which document did the First Continental Congress declare that American colonists had the right to "life, liberty, and property"?

Declaration of Colonial Rights

What was Adam Smith's first work?

The Theory of Moral Sentiments

Which religious philosopher discussed poverty and fair prices in Summa Theologica?

Thomas Aquinas